Subscriber note: Platts to update US aluminum specifications

Platts is updating and clarifying the specifications and methodology descriptions for its US aluminum price assessments to add more detail around normalization factors and break out the separate components of the benchmark US Transaction assessment, effective January 18. The proposed new descriptions state what has been longtime practice as detailed previously in industry presentations and will not change the methodology that has prevailed for many years nor the consistency of the data. Please address any questions to Karen McBeth, karen_mcbeth@platts.com, or by phone +1-202-383-2110. The specifications are as follows:

MW US Transaction Premium -- Daily premium or discount to the London Metal Exchange cash price for spot physical 99.7% high-grade aluminum, delivered, duty-paid US consumer works, arrival within 7-30 days from date of publication, net-30-day terms. Assessment is expressed in cents per pound but also available on a converted dollars/mt basis. Premium or discount is determined based on physical spot deals, bids and offers reported through a daily survey of spot buyers and sellers, using a representative sample of producers, traders and different types of end users (sheet mills, remelt billet makers, extruders, rod mills, etc). Includes business for LME-deliverable, any-origin 99.7% P1020 ingot, low-profile sow or T-bars, basis delivery US Midwest. Volumes are minimum full 45,000 lb truckloads; typical order quantities 100-500 mt. Prices for volumes that are larger or smaller than the typical order size may be normalized to the standard. The daily assessment reflects delivery to a typical-freight consumer in a broad US Midwest region via truck or rail. The typical-freight delivery location is determined to be 1.25-1.75 cents/lb from multiple suppliers or ports (freight rates updated December 2012). Deals that are reported as FOB, FCA, for non-Midwest locations or for particularly close or long freights (i.e., less than/greater than the current range of 1.25-1.75 cents/lb) are normalized before inclusion in the calculations. Platts uses a matrix of typical delivery locations throughout North America and categorizes these locations as "average," "close," or "extra" freights. The "close" or "extra" freight locations are normalized to "average" based on assigned differential values of ranging from plus/minus 0.25 cents to 0.5 cents/lb, which are adjusted periodically based on market feedback on typical locational discounts or extras. Assessment reflects net-30-day payment terms from delivery (net-cash, net-5 and net-10 are normalized using typical LIBOR-plus rates or prevailing net-cash versus net-30 spreads). Deals that require a specific shape or chemistry (i.e., T-bars only, no lithium) may be normalized to the stated standard specification. In the absence of repeatable concluded spot deals where a premium/discount is negotiated, the assessment takes into account firm bids and offers. Changes in the spreads on formula deals, or the premiums and discounts for other grades of aluminum basis Transaction premium, are considered for trend purposes. "Good until cancel" (GTC) deals reflecting a fixed price with non-negotiated premiums, or additional orders given as part of a frame contract, are not considered in the assessment but may be monitored for trend purposes. The assessment reflects the most widely tradable and repeatable premium or discount value prevailing at the close of US markets, typically at 4:30 p.m. US Eastern time. On the last business day of the month, the assessment closes by 1 p.m. US Eastern time.

MW US Transaction -- Daily London Metal Exchange High-Grade Cash Settlement price, converted into cents per pound, adjusted by estimated US free-market premium or discount for prompt delivery Midwest (arrival within 7-30 days from date of publication). (See specification for US Transaction Premium.) Premium determined based on physical business reported by a daily survey of major buyers and sellers, using a representative survey sample of producers, traders and different types of end users. Includes business for LME-deliverable, any-origin 99.7% North American P1020 ingot, low-profile sow or T-bars, meeting LME specifications, basis delivery US Midwest. Volumes are minimum full truckloads, typically 100-500 mt.

MW US Net-cash premium -- Daily premium or discount to the London Metal Exchange cash price for spot physical 99.7% high-grade aluminum, delivered, duty-paid US consumer works, arrival within 7-30 days from date of publication, net-cash payment terms, normalized to a broad Midwest region. The premium is determined based on a survey of producers, traders and end users to determine the prevailing spread between net-cash and net-30 terms, on a cents/lb basis. All other specifications are the same as for the US Transaction Premium (see separate reference).