Platts proposes revision to DDP Southeast Brazil aluminum premium; launch of new assessment to represent ICMS tax differentials

Platts, part of S&P Global Commodity Insights, is proposing to revise its existing Brazilian DDP Southeast aluminum premium assessment specifications to represent P1020 aluminum to which 0%-4% Imposto Sobre Circulação de Mercadorias e Serviços, or ICMS, will be applied after payment.

Platts is also proposing to launch a new assessment representing P1020 aluminum to which 12% ICMS tax will be applied after payment. The changes would take effect Nov. 11, 2022.

ICMS is a value-added tax charged when goods are shipped between different states or from overseas into Brazil. Platts Brazilian DDP Southeast aluminum premium assessments would continue to exclude VAT comprising ICMS, PIS/Cofins, and IPI under the changes proposed.

The proposal is necessitated by the emergence of a two-tiered aluminum market in Brazil, with price differentials observed in DDP aluminum premiums according to origin and associated ICMS implications. The proposed changes aim to reflect the growing importance of ICMS taxes in Brazilian domestic P1020 transaction prices.

Under this proposal, assessment specifications would represent material that is subject to either low (0%-4%) or high (12%) ICMS after payment. Platts existing weekly DDP Southeast Brazil premium assessment (MMABS04) would be renamed Aluminum DDP Southeast Brazil premium (low ICMS). The proposed new assessment would be named Aluminum DDP Southeast Brazil premium (high ICMS).

Specifications regarding quality, quantity, dimensions, incoterms, location, timing, payment, and unit of measure would be as follows for both assessments, unchanged from the existing specifications for MMABS04:

• Quality: Min 99.7% high-grade P1020A
• Quantity: 25-500 mt, 100 mt typical
• Dimensions: standard ingot, sow, and T-bars
• Incoterms: DDP excl VAT
• Location: Southeast Brazil
• Timing: Delivery within 30 days
• Payment: Net-7 to net-10 days
• Unit of Measure: $/mt
• Published: Fridays

Normalization for quality, quantity, dimensions, timing, and payment terms would continue to reflect current differentials applied in the market.

Platts Brazilian aluminum assessments are published in Platts Metals Daily, Platts Metals Week Supplement, and Platts Metals Alert on page PMA 17, and in the Platts database.

The full nonferrous methodology and specifications guide can be found here.

Platts invites feedback on this proposal to Platts_Aluminum@spglobal.com and pricegroup@spglobal.com by Oct. 7, 2022.

For written comments, please provide a clear indication if they 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.