SUBSCRIBER NOTE: Platts updates MOC guidelines for FOB Australia alumina assessments

S&P Global Platts is updating guidelines for its Market on Close assessment process for FOB Australia alumina assessments in Asia.

The guidelines are aimed at bringing greater clarity and transparency to the assessment process and participation in the MOC process.

Platts will publish firm named bids, offers and interest to trade from approved participants in the FOB Australia alumina MOC process in line with the following editorial standards and guidelines.

Buyers may submit bids either at or at a reasonable level below the intraday values, while sellers may submit offers at or at a reasonable level above the intraday values.

All bids and offers are firm from the moment of submission.

Timing and Increments:

1. Buyers and sellers must submit any bids and offers with complete information to Platts editors by phone, instant message or email before 4 pm Singapore time (0800 GMT). From 4 pm Singapore time onwards, participants may only change the price of their bid or offer or withdraw.
2. Counterparties can improve the price of their published bids and offers by a minimum of 50 cents/mt to a maximum of $1/mt in a minimum of five minutes. No price changes are allowed in the final five minutes of the MOC process that concludes at 5:30 pm Singapore time (0930 GMT).
3. Buyers and sellers may withdraw their bids or offers at any time during the MOC process by communicating the same to Platts editors, unless prior interest to trade has been expressed by any potential counterparty.
4. Platts editorial processes require full clarity when communicating bids/offers and intentions to trade. When expressing an intention to hit a bid or lift an offer in the MOC process, any message should typically include the specific price of the trade and the name of the counterparty. Information may not be published if it is not sufficiently clear when communicated to Platts.
5. In the event of a trade, should the buyer or seller wish to rebid or reoffer, they should expressly state their intention to do so to Platts within five minutes of the initial trade, otherwise Platts will presume the original buyers or sellers are not there for additional volume. A rebid or reoffer must match the initial position’s parameters, with the exception of price. A rebid or reoffer can be made at the same level or inferior to the traded price. For example, Company B hits Company A’s bid for $305/mt during the MOC process. Company A can rebid at $305/mt or below this level.

As a general recommendation Platts advises market participants not to wait for the last possible minute before the cut-off deadlines for bids and offers, as the communication may not be completed on time.

Bids and offers submitted on time but in an incomplete form, where the terms are only clarified after the cut-off deadline, will not be used in the assessment process.

Platts will take appropriate steps to ensure the integrity of its assessments if issues of non-performance should arise. In summary, performance is paramount and all bids and offers must be firm and transactions should be performable within the contractual parameters.

Cargo size: Bids and offers must comprise 30,000 mt or 35,000 mt, as per market practice.

Operational tolerance: Platts will reflect standard operational tolerance for FOB Australia cargoes as per market practice of +/-5% of volume at the buyer’s option.

Loading laycans: Platts has observed that typical loading laycans in the Australian spot market in the front month correspond to a 5-7 day range, and as such will accept offers on such a basis. For months where the specific loading laycan has not been declared, offers may be considered on a wider laycan basis, and may be normalized. Bids will be accepted on a 30-day laycan basis. Seller’s option to declare timing is assumed, as per typical market practice.

Ports: Bids or offers submitted in the MOC process must clearly state loading from Bunbury or Kwinana or both at the time of submission (with the specific port to be nominated after the trade). Seller’s option on nomination of a specific port in a multi-port bid/offer is assumed, as per market practice.

Payment terms: MOC participants should state the terms of payment in their bid or offer at the time of submission.

GT&Cs: Counterparties are expected to perform on trades reported during the MOC process based on typical GT&Cs and credit terms that have been applied and accepted by both counterparties in the open market. If an offer is lifted by a buyer during the Platts MOC process, Platts would expect typical GT&Cs and credit terms between both parties to be applicable, even where the GT&Cs and credit terms stated in the originally published offer may differ, if the companies have not conventionally performed on the published terms.

Platts may publish bids, offers and trades with atypical pricing terms, including timing. Bids and offers which are deemed as atypical relative to the market may not be fully taken into consideration for the assessment process.

The FOB Australia assessment carries the codes MMWAU00 for the daily assessment, MMWAU03 for the monthly average, MMWAU04 for the weekly average and MMWAU16 for the yearly average. The daily assessment and accompanying commentary and rationale reports are published in Platts Metals Daily, and on Platts Metals Alert pages 5, 2 and 20 respectively.

For more information on Platts FOB Australia prices and how they are assessed, please visit: https://www.spglobal.com/platts/plattscontent/_assets/_files/en/our-methodology/methodology-specifications/nonferrous.pdf

Alumina MOC bids, offers and trades can be viewed in real-time on page 700 of Platts Metals Alert (PMA), and can be submitted to Platts editors via platts_alumina_moc@spglobal.com

By providing full transparency around transaction data in the MOC process, Platts is able to test the data by exposing firm bids and offers to the marketplace at large, and ultimately to generate an end-of-day price assessment reflective of market value. All participants that have reported bids and offers for publishing in the Platts process are expected to promptly report any transactions stemming from available bids or offers reported to Platts as part of the MOC assessment process.

Platts operates the MOC assessment process on the principle that all published expressions to buy or sell are considered firm and actionable, and of the highest quality in terms of detail and transparency.

Please send any feedback or questions to platts_alumina_moc@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 marked as confidential available upon request.