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WSJ – LETTER TO EDITOR – 24 MAY 2018


Aluminum Market Functions Transparently

The S&P Global Platts Midwest Premium is assessed using a transparent methodology and is a regional differential to the global price of aluminum.

May 24, 2018

Regarding Peter Coors's "In a Trade War, It's Hard to Get a Head" (op-ed, May 15): Mr. Coors unjustly suggests that the S&P Global Platts Midwest Transaction Premium price assessment is inaccurate, and it isn't all about beer drinkers.

Mr. Coors says much of the price increase is due to the aluminum Midwest Premium. However, the benchmark is simply an assessed price reflective of the market value of aluminum in the U.S. as determined by buyers and sellers in the physical market. The main drivers behind the recent price increases have been U.S. import tariffs and U.S. sanctions on Russia's Rusal. The impact of these actions has significantly reduced available and unrestricted supply in the U.S.

The S&P Global Platts Midwest Premium is assessed using a transparent methodology and is a regional differential to the global price of aluminum, which is traded on the London Metal Exchange. The differential reflects, in part, the regional cost of logistics, but it also reflects regionally specific supply and demand conditions in the U.S. Regional price differences are commonplace in commodities pricing due to regional logistics and local supply and fundamentals.

All S&P Global Platts methodologies are published on our website and are rigorously applied. Market participants decide which aluminum price assessments to adopt as industry benchmarks. S&P Global Platts is independent. It doesn't participate in trading the markets we assess and our price reporters have no vested interest in price movements. We also adhere to the internationally recognized International Organization of Securities Commissions' (IOSCO) principles for price-reporting agencies.

The private solution referenced by Mr. Coors will result in less transparency, be comprised of only interested parties, lead to opaque markets and have a negative impact on price discovery.

Martin Fraenkel

President, S&P Global Platts
London