Platts clarifies US aluminum section of Nonferrous Metals Specifications guide

S&P Global Platts confirms that it prioritizes transparent, verifiable and tested data in its assessments of the value of the US aluminum market, including its benchmark MW US Transaction Premium (MWP).

Accordingly, Platts is clarifying the descriptions of market data analysis in its Nonferrous Metals Specifications guide which did not reflect the Platts methodology for all commodity assessments found here:

https://www.spglobal.com/platts/plattscontent/_assets/_files/en/our-methodology/methodology-specifications/platts-assessments-methodology-guide.pdf

WHAT TO REPORT: Platts encourages all market participants to submit all data that may be relevant to Platts assessments, including but not limited to: firm bids/offers that are open to the marketplace as a whole, with standard terms; expressions of interest to trade with published bids and offers, with standard terms; confirmed trades; indicative values, clearly described as such; reported transactional activity heard across the market, clearly described as such; and other data that may be relevant to Platts assessments.

HIERARCHY OF INFORMATION: The aim of the Platts MWP price assessment process is to establish repeatable market value at 4:30 pm US Eastern time (or at 1pm on the last business day of the month).

Platts typically assesses market value between the best firm bid and best firm offer open to the market at the close. Completed, transparent transactions that are fully published by Platts are important in helping establish where trading interest prevails in the market, and may help determine where, in a bid/offer spread, Platts may assess value for publication. Firm bids and offers that are available to the entire market may take precedence over trades that have been concluded earlier in the assessment process when establishing the value of the market, particularly if bids are available at the close above previously traded levels, or offers are available to the market below previously traded levels.

PREMIUMS AND "ALL-IN" PRICES: Platts is also updating the language in the aluminum section of the nonferrous guide with regard to all-in fixed price deals, to better reflect the prevailing methodology which does take these concluded transactions into account, but with possible normalization. Platts final published MWP assessment will give priority to transactions that have clearly been negotiated, concluded and reported as a premium, over a derived premium value that is reported as a part of an original "all-in" trade. Premiums derived from an "all-in" transaction may also be normalized further when the underlying LME reference value may be unclear, only partially confirmed or irrelevant to the original "all-in" transaction.

The aluminum section in the specifications guide now reads 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% P1020A ingot, low-profile sow or T-bars, basis delivery US Midwest, normalized to sow/T-bar shape. Volumes must be a minimum full 45,000 lb (20 mt) truckload or multiples thereof to be included in the assessment. The typical order size for price normalization is 100-1,000 mt, and price data for volumes that are smaller or larger 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. Trades, bids and offers that are reported to Platts as FOB, FCA or for non-Midwest locations may be normalized for assessment purpose. In addition, Platts uses a matrix of typical delivery locations throughout North America and categorizes these locations as "average," "close" or "extra" freights based on market input. The "close" or "extra" freight locations are normalized to "average" based on differential values determined by Platts, which are adjusted on the back of feedback from active market participants on typical locational discounts or extras. The average – or basis – locations include: Anderson, Lafayette, and Warrick, Indiana; Berea, Russellville and Shelbyville, Kentucky; St. Louis, Missouri; Carthage, Huntington and New Johnsonville, Tennessee; Manitowoc, Wisconsin; and Ravenswood, West Virginia. 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, based on a survey). Deals that require a specific shape or chemistry (i.e., T-bars only, no lithium) may be normalized to the stated standard specification. Platts final published MWP assessment gives priority to transactions that have clearly been negotiated, concluded and reported as a premium, over a derived premium value that is reported as a part of an original "all-in" trade. Premiums derived from an "all-in" transaction may also be normalized further when the underlying LME reference value may be unclear, only partially confirmed or irrelevant to the original "all-in" transaction. The assessment reflects the most widely tradable and repeatable premium or discount value prevailing at the close of US markets, typically at 4:30 pm US Eastern time. On the last business day of the month, the assessment closes at 1 pm US East Coast time. The assessment follows the London holiday schedule.

Please submit any feedback, comments or questions to platts_aluminum@spglobal.com and pricegroup@spglobal.com.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not markets as confidential available upon request.