Platts revises DDP Southeast Brazil aluminum premium coverage to represent low and high ICMS tax differentials

Platts, part of S&P Global Commodity Insights, is now publishing two separate assessments for Brazilian P1020 aluminum premiums, representing Imposto Sobre Circulação de Mercadorias e Serviços (ICMS) tax differentials: Aluminum DDP Southeast Brazil premium (low ICMS) and Aluminum DDP Southeast Brazil premium (high ICMS).

Effective Nov. 11, 2022, Platts has revised its existing Brazilian DDP Southeast aluminum premium assessment specifications to represent P1020 aluminum to which 0%-4% ICMS tax will be applied after payment.

At the same time, Platts has launched a new assessment representing P1020 aluminum to which 12% ICMS tax will be applied after payment.

The revised low ICMS assessment and new high ICMS assessment were first proposed on Sept. 23:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/092322-platts-proposes-revision-to-ddp-southeast-brazil-aluminum-premium-launch-of-new-assessment-to-represent-icms-tax-differen.

The decision to implement the proposed changes was communicated in a subscriber note published Oct. 13:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/101322-platts-to-revise-ddp-southeast-brazil-aluminum-premium-launching-new-assessment-to-represent-icms-tax-differentials

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 specifications continue to exclude VAT -- comprising ICMS, PIS/Cofins, and IPI -- at the point of assessment.

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 now represent material that is subject to either low (0%-4%) or high (12%) ICMS after payment. Platts legacy weekly DDP Southeast Brazil premium assessment (MMABS04) has been renamed to Aluminum DDP Southeast Brazil premium (low ICMS). The new assessment (ABRAA04) is named Aluminum DDP Southeast Brazil premium (high ICMS).

Specifications regarding quality, quantity, dimensions, incoterms, location, timing, payment, and unit of measure are as follows for both assessments, unchanged from the historical 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 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.

Full details of Platts assessments methodology and non-ferrous metals specifications can be found here and here.

Please send all feedback, comments or questions to Platts_Aluminum@spglobal.com and pricegroup@spglobal.com.

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