Launch of new European aluminium low-carbon differentials for value added products; phased discontinuation of existing VAP differential

After an extended consultation period, Fastmarkets will launch two new European aluminium low-carbon value-added product (VAP) differentials to complement its existing low-carbon offering in Europe and begin the phased discontinuation of the existing MB-AL-0382 aluminium low-carbon value-added product differential.

Fastmarkets will launch a standalone aluminium low-carbon billet differential, published on a monthly basis with a three-month timing window, as well as an aluminium low-carbon differential for VAP ex-billet (primary foundry alloy, wire rod and slab), published monthly with a 12-month timing window.

The new differentials will reflect the developing low-carbon marketplace and different trading mechanisms, with some better suited to shorter spot transactions and others to longer-term agreements.

The price specifications will be as follows:

MB-AL-0391 Aluminium low-carbon differential billet, Europe, $/tonne
Carbon limit: 4tCO2e per tonne of aluminium produced, Scope 1 and Scope 2 emissions.
Type: Extrusion billet
Quantity: Minimum 100 tonnes
Location: Europe
Unit: USD/tonne
Timing: Within three months
Publication: Monthly, first Friday of the month, 4pm London
Note: Does not include other value-added products

MB-AL-0392 Aluminium low-carbon differential value-added product ex-billet, Europe, $/tonne
Carbon limit: 4tCO2e per tonne of aluminium produced, Scope 1 and Scope 2 emissions.
Type: Primary foundry alloy, wire rod and slab
Quantity: Minimum 100 tonnes 
Location: Europe
Unit: USD/tonne
Timing: Within 12 months
Publication: Monthly, first Friday of the month, 4pm London
Note: Does not include aluminium billet

Fastmarkets is aware of the importance of its existing assessment of the aluminium low-carbon differential value-added product, Europe and its use in contracts. To allow the market time to adapt to the newly-launched differentials, we will start a phased discontinuation of the existing differential, as per the consultation. It will continue to be published alongside the new differentials on its current monthly basis until Friday March 1.

The historic data for this differential will remain on the dashboard for a period of time.

The changes will also affect the calculation of some inferred prices that are calculated using the midpoint of the underlying premium and the midpoint of the existing VAP differential, which will be replaced with the midpoint of the new low-carbon aluminium billet differential from December 1.

The affected inferred prices are:
MB-AL-0379 Aluminium 6063 extrusion billet premium, ddp Italy (Brescia region), inferred low-carbon mid-point, $/tonne
MB-AL-0380 Aluminium 6063 extrusion billet premium, ddp North Germany (Ruhr region), inferred low-carbon midpoint, $/tonne

These prices will be a part of the Fastmarkets base metals package.

The changes to the VAP differentials will not affect the existing ingot differentials, which include MB-AL-0381 aluminium low-carbon differential P1020A, Europe, $/tonne, nor will they affect the P1020A inferred prices — MB-AL-0377 aluminium P1020A premium, in-whs dup Rotterdam, inferred low-carbon midpoint, $/tonne and MB-AL-0378 aluminium P1020A premium, in-whs dp Rotterdam, inferred low-carbon midpoint, $/tonne.

Following feedback, Fastmarkets will not launch a standalone aluminium low-carbon differential primary foundry alloy, Europe, $/tonne; a combined differential for wire rod and slab; or the proposed related inferred differentials.

Fastmarkets will maintain its current carbon limit of 4tCO2e per tonne of aluminium produced, under Scope 1 and Scope 2 emissions, for all its differentials.

To provide feedback on these prices, or if you would like to provide price information by becoming a data submitter to these prices, please contact Carrie Bone/Imogen Dudman by email at: pricing@fastmarkets.com. Please add the subject heading “FAO: Carrie Bone/Imogen Dudman re: European aluminium low-carbon differentials.”

Please indicate if comments are confidential. Fastmarkets will consider all comments received and will make comments not marked as confidential available upon request.

To see all Fastmarkets pricing methodology and specification documents, go to https://www.fastmarkets.com/methodology.

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