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The intention is to increase the frequency of the publication of the index to daily (every weekday) from weekly at present.
Data collected over the past year shows it is possible to accurately normalise other Pacific origin data to the fob Australia base specification. Data relating to spot trades outside the base specification – namely, from Indonesia, Vietnam and India – will be normalised using in-house developed models based on regression analysis of collected data points.
The formal inclusion of these trades into the index brings additional liquidity into the calculation, supporting the increase in publication frequency without compromising the connection to the physical market.
In addition, Metal Bulletin will reduce the minimum tonnage for trades included in its index to 5,000 tonnes, from 10,000 tonnes at present. While it is understood that 5,000 tonne cargoes are rarely traded, this reduction will reduce the impact of non-transaction data (bids, offers, deals heard and assessment) on the final index calculation.
During times of low liquidity, non-transaction data is included in the index calculation, weighted at the minimum tonnage. Confirmed trades are given their full weighting in the final calculations.
Furthermore, in the absence of any trades on a given day, Metal Bulletin will roll over the last confirmed transaction for inclusion in that day’s index calculation.
The above measures will ensure that the daily alumina index is intrinsically tied to the physical market and confirmed spot transactions, even in times of low liquidity.
Finally, Metal Bulletin intends to change the deadline for data submission to 4pm London time, from 2pm at present. The index will be published between 4pm and 5pm, London time, compared with between 2pm and 3pm at present.
The full specification for the fob Australia alumina index, incorporating the proposed changes outlined above, is as follows:
Description: Alumina index, fob Bunbury, Australia Units: US$/ dry metric tonne Basis: fob Bunbury, Australia Material origin: Australia (other Pacific origins normalised) Grade: Smelter grade alumina, minimum purity of 98.5% Al2O3 Trade Size: Minimum 5,000 tonnes Payment Terms: 30 days after loading Loading Port: Bunbury/Kwinana (other ports normalised) Loading window: Within 2 months Delivery Method: Bulk carrier Publication: Every weekday between 4pm and 5pm, London time (rolled over on UK public holidays)
The consultation period for this proposed amendment will end one month from the date of this pricing notice, on Friday November 24. Changes will take place, subject to the results of this consultation, from Monday November 27.
To provide feedback on this the amendments outlined above, or if you would like to provide price information by becoming a data submitter to the alumina indices, please contact Charlotte Radford by email at: pricing@metalbulletin.com. Please add the subject heading FAO: Charlotte Radford, re: fob Australia alumina index.
See all Metal Bulletin’s pricing methodology and specification documents here.