Launch of US low-carbon aluminium differentials: pricing notice

Fastmarkets is launching low-carbon aluminium differentials to its existing US Midwest P1020A and value-added product (VAP) premium contracts to meet market interest in low-carbon aluminium pricing mechanisms.

The first publication of the low-carbon differentials is on Friday, November 3. The differentials will be published on the first Friday of every subsequent month.

The specifications are as follows:

MB-AL-0389 Aluminium low-carbon differential P1020, US Midwest, c/lb
Carbon limit: 4tCO2e per tonne of aluminium produced, Scope 1 and 2 emissions*
Quality: P1020A or 99.7% minimum Al purity (Si 0.10% max, Fe 0.20% max). Ingot, T-bar, sow
Quantity: Min 100 tonnes
Location: Delivered consumer works Midwest, differential on top of P1020A premium and exchange-listed aluminium price
Unit: US cents per pound
Timing: Delivery starting within three months
Type: Assessed range
Publication: Monthly, first Friday of the month. 4pm London

MB-AL-0390 – Aluminium low-carbon differential value-added product, US Midwest, c/lb
Carbon limit: 4tCO2e per tonne of aluminium produced, Scope 1 and 2 emissions*
Products: Extrusion billet, primary foundry alloy, wire rod, slab
Quantity: Min 100 tonnes
Location: Delivered into US Midwest region, differential on top of value-added product premium and exchange-listed aluminium price
Unit: US cents per pound
Timing: Delivery starting within three months
Type: Assessed range
Publication: Monthly, first Friday of the month. 4pm London

* Fastmarkets will define low-carbon aluminium originating from smelters that emit a maximum of 4 tonnes of CO2e per tonne of aluminium produced under Scope 1 and 2 emissions. Scope 1 and 2 includes direct carbon emissions from the smelter itself and indirect emissions from the power source of the smelter.

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

The differentials will be assessed as an upcharge or discount on top of existing Midwest P1020A and VAP premiums, cents per pound and will be published on a monthly basis.

Fastmarkets will closely track the liquidity and volatility in these markets, with a view to increasing frequency if needed.

Fastmarkets also will closely monitor developments in the VAP market. If there is a price divergence in the market, Fastmarkets might look to split the VAP basket into separate product differentials, such as an individual differential for billet. There is currently a proposal to amend the specifications in this way for the European low-carbon differentials.

The assessments will be expressed as a differential rather than a separate all-in premium to protect liquidity on existing Fastmarkets aluminium premiums.

The differentials could be used on top of Fastmarkets’ underlying Midwest P1020A and VAP premiums including, but not limited to:
MB-AL-0342 Aluminium primary foundry alloy silicon 7 ingot/T-bar premium, dlvd dup over P1020A Midwest US, US cents/lb
MB-AL-0052 Aluminium 6063 extrusion billet premium, delivered Midwest US, US cents/lb
MB-AL-0020 Aluminium P1020A premium, ddp Midwest US, US cents/lb

The low-carbon VAP assessment could also be used as an upcharge for other aluminium products, such as slab, wire rod, T-bar and sow, which Fastmarkets does not currently price.

To provide feedback on the differentials above or to become a data submitter, please contact Yasemin Esmen by email at pricing@fastmarkets.com. Please add the subject heading “FAO: Yasemin Esmen, re: US Green Aluminium.” 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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