Launch of two Brazilian aluminium delivered premiums

Fastmarkets will launch two new Brazilian premium spot assessments for aluminium P1020A, delivered Sao Paulo region on Tuesday March 5 to better reflect the two-tier market created by the different state value-added tax (VAT) rates, known as the ICMS tax.

After a consultation period, Fastmarkets will launch two aluminium premiums: one for the low-VAT market and another for high-VAT P1020A. 

The difference between ingot sold with low- and high-VAT rates has become more pronounced because of additional domestic production capacity that led the government to end a duty-free quota it had introduced in 2014, essentially deeming Brazil self-sufficient in terms of primary aluminum production.

The two new premium assessments will not actually include VAT or any tax other than import duties where applicable. Sales with 12% VAT are intrinsically transacted at lower premiums to compensate for higher taxes, while material with zero or 4% VAT can be sold at higher premiums.

The specifications are:

Aluminium P1020A premium, low-VAT market, delivered São Paulo region, $/tonne
Quality: P1020A or 99.7% minimum Al purity (Si 0.10% max, Fe 0.20% max) ingot
Quantity: Min 100 tonnes
Location: Delivered in São Paulo region with up to 4% ICMS state tax, duty-paid, VAT removed, premium on top of LME cash prices
Timing: Within 4 weeks
Unit: USD/tonne
Payment terms: Cash against documents (7 days after bill of lading date); other payment terms normalized
Publication: Once every two weeks. Tuesday, 3-4pm London time

Aluminium P1020A premium, high-VAT market, delivered São Paulo region, $/tonne
Quality: P1020A or 99.7% minimum Al purity (Si 0.10% max, Fe 0.20% max) ingot
Quantity: Min 100 tonnes
Location: Delivered in São Paulo region with 12% ICMS state tax, duty-paid, VAT removed, premium on top of LME cash prices
Timing: Within 4 weeks
Unit: USD/tonne
Payment terms: Cash against documents (7 days after bill of lading date); other payment terms normalized
Publication: Once every two weeks. Tuesday, 3-4pm London time

These two new prices will replace the existing MB-AL-0021 aluminium P1020A premium, delivered Sao Paulo region, $/tonne. Its pricing history will still be available on the dashboard. 

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

To provide feedback on these prices or if you would like to provide price information by becoming a data submitter, please contact Letícia Simionato by email at: pricing@fastmarkets.com. Please add the subject heading “FAO: Letícia Simionato re: Brazilian aluminium premium assessment.”

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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