Transformation, progress attest to strong year for non-ferrous pricing

Last month, Metal Bulletin completed its first external assurance review for its aluminium P1020A in-warehouse Rotterdam duty unpaid price, which demonstrates how credible the price is in terms of quality and control. All our prices follow the same processes and methodologies and thus the same high standards and alignment to International Organization of Securities Commissions (Iosco) principles apply.

The assurance review by PricewaterhouseCoopers (PwC) related to a price listed on the Chicago Mercantile Exchange (CME) and we continue to support the market with the listing of premium futures contracts.

On October 31, CME Group announced the launch of a Shanghai copper premium contract on 13 November, which will be settled against Metal Bulletin’s Shanghai cif copper premium. This is another big achievement in the development of our suite of physical price assessments into financial hedging tools.

CME Group’s European aluminium premiums contracts, which are settled against Metal Bulletin’s duty unpaid (AEP) and duty paid (EDP) in-warehouse Rotterdam price assessments, have been gaining traction this year as well. Open interest in both contracts has increased by 42% since the start of the year and volumes have picked up nicely.

The AEP contract, for instance, has seen trading volume quadruple year on year in the first three quarters of the year to 35,333 lots and a record daily volume of 1,980 lots on 1 August.

In other recent developments, Metal Bulletin has unveiled plans to launch a new arbitrage calculator tool in December for the shipment of aluminium from London Metal Exchange warehouses in Asia to the US Midwest.

This tool will measure the profitability of cancelling metal stocks in Asia to ship them to the key consuming region of the US. With this monthly report, Metal Bulletin hopes to bring further transparency to trade flows and freight costs to the US, which is a natural deficit market and is attracting increased interest from international traders.

Refining prices
This year has also been a year of consolidation with Metal Bulletin refining its methodology documents and pricing processes to enhance transparency to comply with the Iosco principles and prepare for the implementation of MiFiD II in January 2018.