Platts to revise DDP Southeast Brazil aluminum premium; launching new assessment to represent ICMS tax differentials

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

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

The revision and new launch were first proposed Sept. 23.

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

The revision, determined after a period of industry feedback, 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 changes aim to reflect the growing importance of ICMS taxes in Brazilian domestic P1020 transaction prices.

Assessment specifications will represent material that is subject to either low (0%-4%) or high (12%) ICMS after payment. Platts's existing weekly DDP Southeast Brazil premium assessment (MMABS04) will be renamed Aluminum DDP Southeast Brazil premium (low ICMS). The new assessment (ABRAA04) will be named Aluminum DDP Southeast Brazil premium (high ICMS).

Specifications regarding quality, quantity, dimensions, incoterms, location, timing, payment, and unit of measure will 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-seven to net-10 days

Unit of Measure: $/mt

Published: Fridays

Normalization for quality, quantity, dimensions, timing, and payment terms will 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.

Please send comments and questions on this decision to Platts_Aluminum@spglobal.com and pricegroup@spglobal.com.

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.