Proposal to amend aluminium P1020A MJP spot premium methodology

Fastmarkets is proposing to amend its aluminium P1020A main Japanese ports (MJP) spot price assessment methodology, which is assessed on a cost, insurance and freight (CIF) incoterm basis, to include tenders and deals from the domestic market in Japan and to extend the delivery window.

The aim of the change is to create a more robust price assessment by increasing the pool of liquidity.

The current methodology indicates that pricing data must be under a CIF basis to the main Japanese ports and for the delivery window to be within six weeks for it to be accepted for data analysis in the price assessment process.

Market participants have indicated to Fastmarkets that domestic deals in the Japanese market follow the same trend as international CIF deals and that netbacks can be used to include them on a CIF basis.

Fastmarkets is therefore proposing to take into consideration trucking costs, exchange rates, payment terms and warehouse costs to normalize data from domestic deals and tenders to a CIF basis.

Fastmarkets particularly invites feedback from the market on the approach toward the Japanese Yen to US dollar exchange rate, with market participants having identified it as a potential source of volatility. For example, a monthly average rate could be used or the exchange rate on the day the deal was concluded.

Fastmarkets also invites feedback on an acceptable delivery window for a spot assessment in this consultation with regard to liquidity, after some market participants suggested that an extension to the delivery window could help capture more liquidity.

The consultation will run for four weeks from Tuesday February 21 and will end on Tuesday March 21. The amendment will then take place, subject to market feedback, on Friday March 24.

To provide feedback or if you would like to provide price information by becoming a data submitter to this price assessment, please contact Chay Chye Leng or Alice Mason by email at pricing@fastmarkets.com. Please add the subject heading “re: Aluminium MJP spot methodology.”

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

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