CRU Prices Aluminium Methodology and Definitions Guide

Transcription

1 CRU Prices Aluminium Methodology and Definitions Guide September 2016

2 0CRU Prices Across mining, metals and fertilizers CRU s reputation with clients is for reliability, independence and authority. And whether delivered as the CRU Prices Service or as part of a product such as a Monitor or Fertilizer Week, CRU s commitment to high quality price assessment is consistent. Our insights are built on the solid foundation made by a commitment to primary research and a robust and transparent methodology. The need for exclusive, first-hand knowledge is why we have invested in a global team of analysts and price reporters. CRU s authoritative and independent work whether in forecasting, price assessment or cost analysis focuses on helping you make real business decisions. Across a comprehensive range of commodities, we strive to provide clients with the best service and closest contact flexible, personal, and responsive. We base assessments on a strong and transparent methodology, with trained price assessors and expert analysts working together to ensure prices are unbiased and accurate. If you have prices embedded in contracts you can trust CRU s team and methodology to provide certainty and continuity. Our philosophy has led to widespread adoption and use of our price assessments by physical and financial market players from across the globe. Across the mining, metals and fertilizers markets we produce over 500 regular price assessments at a range of frequencies appropriate to a market: bi-weekly, weekly and monthly. CRU s US hot rolled coil price is the leading benchmark for the US steel industry, relied on by 85% of those who use a benchmark to settle contracts, according to independent market research. The CRU HRC price, often known as the cru, is more popular than the next two most providers combined. The CRU HRC price is unique in being subject to a third party audit. CRU complies with the IOSCO Guidelines for Best Practice Price Assessment CRU prices are based on regular contact with a wide network of market participants. This network is constantly reviewed and expanded to ensure a balance of buyers and sellers and actual activity in the market. In July 2014, we adopted the internationally recognised and independent IOSCO standards for price assessment. All price assessments are carried out by experienced analysts who have a rich understanding of the markets that they are covering. We treat dialogue with market participants as confidential and no details are shared with third parties. We also regularly carry out consultations with the market about its methodology to ensure that it accurately reflects the underlying commodity market and latest regulations. Independent market research of steel buyers confirms that a robust and transparent methodology is one of the main criteria for judging the robustness of a price benchmark which is why so many companies rely on CRU prices to do business. Independent market research commissioned by CRU showed that more than 80% of buyers and sellers said a methodology that is freely available and transparent was an important criterion for judging the robustness of a price benchmark. If you have any questions or general comments on any of our prices, please prices@crugroup.com. How to use CRU prices in contracts We base price assessments on a strong and transparent methodology, with trained price assessors and expert analysts working together to ensure prices are unbiased and accurate. If you have prices embedded in contracts you can trust CRU s team and methodology to provide certainty and continuity. We believe there are four main criteria for choosing a prices provider on which to base contracts: 1. Robustness and transparency of methodology 2. Experience of team of price assessors 3. Comprehensiveness of prices offered 4. Availability of an accurate historical price series. Any company that relies on CRU prices to settle contracts will want to make sure that they have an appropriate licence arranged with CRU. This is different from a standard subscription and makes sure clients are using prices in a way that is legally compliant. If you have any questions or general comments on any of our prices or to find out more about using CRU prices to settle contracts prices@crugroup.com. CRU Prices Service Methodology and Definitions Page 2 of 9

3 B CRU Prices CRU Prices... 2 CRU complies with the IOSCO Guidelines for Best Practice Price Assessment... 2 How to use CRU prices in contracts... 2 CRU Aluminium Price Assessment Methodology... 4 Frequency... 4 Assessment Method... 4 Deactivated premiums, fees and prices... 4 Sizes... 4 Timing... 4 Revisions... 4 Aluminium Prices... 5 Merchant Premia... 5 US Midwest ingot P US Midwest billet upcharge... 5 Rotterdam ingot duty-unpaid... 5 Rotterdam ingot duty-paid... 5 Germany billet delivered... 6 Rotterdam billet in warehouse... 6 Italy billet delivered... 6 Germany primary foundry alloy (PFA) delivered... 6 Germany wire rod delivered... 7 Japan ingot spot CIF... 7 Japan ingot quarterly CIF... 7 Japan billet upcharge CIF... 8 South Korea ingot CIF... 8 Singapore ingot FCA... 8 CRU Prices Service Methodology and Definitions Page 3 of 9

4 CRU Aluminium Price Assessment Methodology CRU s methodology seeks to reflect the developing regulatory landscape for price assessments in general and the IOSCO principles set out in July CRU is constantly reviewing its practice to comply with the highest standards. This document sets out the current methodology for aluminium premia. CRU collects ingot and shapes premia as part of its assessment of broader market conditions that are published in the Aluminium Monitor and Aluminium Products Monitor. These premia are gathered from regular discussions with a wide network of market participants. This network is frequently reviewed to ensure a balance of buyers and sellers, and to reflect actual activity in the market. CRU also conducts consultations with the market about its methodology all answers are treated as confidential. Market participants include producers, traders and end users. In the absence of spot orders, data providers can submit an opinion on the prevailing market premium. Data providers are required to indicate whether their submission is an actual transaction or an opinion. All data submitted is used solely for the purpose of calculating the final CRU regional aluminium premiums assessments. Frequency All premia are provided once a month, with the final price assessment being published in the Aluminium Monitor and Aluminium Products Monitor. Assessment Method Analysts use telephone and services to collect premiums as well as to verify the information received. We endeavour to record actual transactions but we also include bids and offers. More weighting is given to transactions when assessing a price from a range of possible levels. Data is gathered through consultation with producers, consumers and traders. Published premia reflect the average of the deals concluded within the time frame under consideration. Outliers are excluded from the assessment. If a market has been quiet with no deals concluded, premia are rolled over. However, if the overall market trend is strongly upward or downward but there were no transactions concluded, bids and offers will be used to form the assessment. Aluminium premia represent CRU s assessment of the level at which business has been concluded, following discussions with industry participants. All data are collected or reviewed by analysts with at least 5 years industry experience. Deactivated premiums, fees and prices Premia will remain active as long as it can be demonstrated that there are a sufficient number of buyers and sellers and/or traders which allow for the analyst to make an accurate assessment. If the quotation suffers from limited transparency or if business dynamics change, it will be deactivated. Its history will still be available to clients for a fee, should they require it, but no further information will be collected for that product from the time it is deactivated. Sizes Transaction sizes vary by commodity type-details are listed below. Timing spot assessments typically reflect transactions for a product to be supplied within 30 days details are listed below. Revisions CRU reserves the right to adjust its historical pricing assessments if compelling new evidence emerges If you have comments or questions about the methodology used by CRU to assess prices, or questions about particular prices, please paul.williams@crugroup.com. To find out more about CRU s pricing products and services go to CRU Prices Service Methodology and Definitions Page 4 of 9

5 Aluminium Prices Merchant Premia US Midwest ingot P % purity high-grade aluminium, P1020 Aluminum Association specification Delivered, duty-paid Ingot, low profile T-bar, sow Imperial pounds (lbs) Typical volumes tonnes. Prompt business for 7 to 30 days ahead. 0%. US Midwest billet upcharge 6063 billet to Aluminium Association specifications (Si %, Mg %, Fe 0.35% max, Cu 0.1% max, Cr 0.1% max, Zn 0.1% max, Ti 0.1% max, Others 0.05% each 0.15% total) Delivered, duty-paid, up charge over US Midwest ingot premium Imperial pounds (lbs) Typical volumes tonnes. 0% Prompt business for 7 to 30 days ahead. Premium above the official LME cash settlement price for aluminium and US Midwest ingot premium at the time of contract confirmation Rotterdam ingot duty-unpaid Extruded product prices (conversion fees over ingot or Delivered, duty-unpaid Typical volumes tonnes. Prompt business for up to 7-30 days ahead. 0% Rotterdam ingot duty-paid Delivered, duty-paid CRU Prices Service Methodology and Definitions Page 5 of 9

6 Typical volumes tonnes. Prompt business for up to 7-30 days ahead. Includes 3% import tariff (3% of LME cash + Rotterdam duty-unpaid premium) Germany billet delivered 6063 alloyed aluminium (Si %, Mg %, Fe 0.35% max, Cu 0.1% max, Cr 0.1% max, Zn 0.1% max, Ti 0.1% max, Others 0.05% each 0.15% total) Delivered, duty-paid, over LME cash price includes Rotterdam duty-paid ingot premium Minimum 25 tonnes, typical volumes tonnes. Prompt business for up to 7-90 days ahead. Includes 4% import tariff (4% of LME cash) Rotterdam billet in warehouse 6063 alloyed aluminium (Si %, Mg %, Fe 0.35% max, Cu 0.1% max, Cr 0.1% max, Zn 0.1% max, Ti 0.1% max, Others 0.05% each 0.15% total) Length 5-7m, diameter 6-8 ( mm) Delivered, duty-paid, includes Rotterdam duty-paid ingot premium Typical volumes tonnes. Prompt business for up to 7-90 days ahead. Deliveries in shorter timeframe are normalised to standard delivery time. Includes 4% import tariff (4% of LME cash) Italy billet delivered 6063 alloyed aluminium (Si %, Mg %, Fe 0.35% max, Cu 0.1% max, Cr 0.1% max, Zn 0.1% max, Ti 0.1% max, Others 0.05% each 0.15% total) Length 5-7m, diameter 6-8 Delivered, duty-paid, includes Rotterdam duty-paid ingot premium Typical volumes tonnes. Prompt business for up to 7-90 days ahead. Includes 4% import tariff (4% of LME cash) Germany primary foundry alloy (PFA) delivered Alloy aluminium (Si 7%, Mg 0.3%) A primary Ingot Delivered, duty-paid, over LME cash includes Rotterdam duty-paid ingot premium CRU Prices Service Methodology and Definitions Page 6 of 9

7 Typical volumes tonnes. Prompt business for up to 7-90 days ahead. Includes 6% import tariff (6% of LME cash) Germany wire rod delivered EC grade aluminium (Al 99.7%min, Fe %, Si %, Cu 0.005%) 9.5mm diameter Delivered, duty-paid, over LME cash includes Rotterdam duty-paid ingot premium Minimum 25 tonnes, typical volumes tonnes. Prices for volumes outside of this range will be normalised to the standard volume. Prompt business for up to 7-90 days ahead. Includes 7.5% import tariff (7.5% of LME cash) Japan ingot spot CIF Japan ingot quarterly CIF Ingot, T-bar, sow CIF main Japanese ports Minimum 25 tonnes, typical volumes tonnes. Prices for volumes outside of this range will be normalised to the standard volume. Prompt business for 7 to 30 days ahead. Deliveries in shorter timeframe are normalised to standard delivery time. Ingot, T-bar, sow CIF main Japanese ports Quarterly Japan quarterly premium is negotiated in the last month of the prior quarter. Large volume deals agreed by major producers and consumers, deals typically in excess of 1000 tonnes. Deliveries for agreed period, standard is four quarterly contracts per year. Communication with major producers and consumers on settled quarter ahead contracts. CRU Prices Service Methodology and Definitions Page 7 of 9

8 Japan billet upcharge CIF 6063 alloyed aluminium (Si %, Mg %, Fe 0.35% max, Cu 0.1% max, Cr 0.1% max, Zn 0.1% max, Ti 0.1% max, Others 0.05% each 0.15% total) Length 5-7m, diameter 6-8 ( mm) CIF main Japanese ports, up-charge over Japan CIF ingot premium monthly Minimum 25 tonnes, typical volumes tonnes. Prices for volumes outside of this range will be normalised to the standard volume. In the absence of spot orders, data providers can submit an opinion on the prevailing market premium. N/A South Korea ingot CIF Singapore ingot FCA Ingot, T-bar, sow CIF Large volumes transactions, imports by the Korean Public Procurement Service (PPS) are typically greater than 500 tonnes Periodic large imports, typically monthly or quarterly. Less frequent smaller volume transactions Communication with major producers, traders and consumers. Ingot, T-bar, sow FCA Singapore Minimum 25 tonnes, typical volumes tonnes. Prices for volumes outside of this range will be normalised to the standard volume. Prompt business communication with major producers, traders and consumers. CRU Prices Service Methodology and Definitions Page 8 of 9

9 Glossary of abbreviations INCO TERM RULES FOR ANY MODE OR MODES OF TRANSPORT: EXW Ex-Works FCA Free Carrier CPT Carriage Paid To CIP Carriage and Insurance Paid To DAT Delivered at Terminal DAP Delivered at Place DDP Delivered Duty Paid INCO TERM RULES FOR SEA AND INLAND WATERWAY TRANSPORT: FAS Free Alongside Ship FOB Free On Board CFR Cost and Freight CIF Cost Insurance and Freight COUNTRY ABBREVIATIONS USED: We use ISO 3166 alpha-2 standard country codes CRU Prices Service Methodology and Definitions Page 9 of 9