The new London Metal Exchange alumina contract will be settled in part by using data from the Fastmarkets MB index, with shared weight given to the CRU’s Alumina price index. Per Fastmarkets, the daily FOB Australia alumina index is a suitable choice for the exchange, having moved from a weekly to a daily basis just over a year ago. The move was made to address the market’s ever more volatile situation, it says. The index achieved type 1 IOSCO assurance last fall.
Fastmarkets chief executive officer Raju Daswani expressed the firm’s happiness at inclusion in the LME’s new contract and the progress the index has achieved to date. He said that “Fastmarkets’ significant presence in the LME’s alumina basket is testament to how well our index has adapted to a changing market and is increasingly referenced by the physical market since moving to daily pricing over a year ago.” He added that “We look forward to working with the LME and continuing to engage with the alumina market.”
Fastmarkets’ alumina index represents a fundamental shift in price indexing for the aluminium precursor. Initially the alumina market was figured as a percentage of the LME’s aluminium price. However, in recent years the alumina market has come into its own, necessitating an independent index.
Since the index’s launch in the fall of 2010, the Fastmarkets MB’s fob Australia index hit a high of USD 703.75 per metric ton last April, propelled to its apex largely due to a market in turmoil. Last spring saw mandatory curtailment at Alunorte, the world’s largest alumina refinery, US government sanctions on major alumina supplier UC Rusal, and labor difficulties at Alcoa’s alumina operations in Australia.
