CRU recently launched daily European P1020A FCA premium assessments for duty-paid and duty-unpaid material, building on our initiation of daily in-warehouse assessments earlier this year. This Insight covers the reasons for the additional European aluminium premiums assessments and their use cases.
Incoterms and supply chain positioning impact pricing
In-warehouse assessments reflect the price of aluminium available in warehouses and provide a clear, specific price point. This single figure is particularly useful for large traders and futures exchanges. However, extensive market feedback points to FCA assessments being the most attractive option for smaller parcels of physically traded product, particularly when published as a low-high range.
In early October, CRU launched daily European aluminium premium assessments for P1020A on an FCA basis, covering both duty-paid and duty-unpaid material, and using the same material specifications as the in-warehouse assessments. The FCA assessments complement the in-warehouse ones by reflecting the basis on which the vast majority of transactions take place.
This makes them closely aligned with trading practices and it is useful for pricing, negotiation and comparison without having to translate from another delivery basis. FCA assessments are published as ranges – their upper and lower limits include bids, offers and transactions, providing users with a broader view of market levels and variation. The range can also be useful in contracts, where its boundaries provide more context than a midpoint alone.
Assessments may reflect differences in material characteristics and production routes, including sustainability factors such as the technology and power used.
The distinction between the two is the delivery point. In Rotterdam, under FCA (Free Carrier), the seller delivers aluminium to the buyer’s nominated carrier at the agreed place and handles export clearance where applicable. The buyer arranges and pays for transport from this point. An in-warehouse assessment, by contrast, prices aluminium while it is in the warehouse, before collection or onward delivery. The allocation of loading, handling and other costs depends on the contract terms, so the premiums are not automatically interchangeable. In practice, the monetary difference between Rotterdam FCA and in-warehouse premiums has generally been relatively modest and consistent, at around $15–20 per tonne.
However, the midpoint of the FCA range should not be assumed to sit just $15–20 per tonne above the in-warehouse assessment. In the CRU methodology, the in-warehouse assessment is more transaction-led and includes confirmed trades from the previous four days, with older trades given progressively less weight.
The FCA range may also reflect other factors, including the material’s sustainability characteristics, and therefore may not align precisely with the level at which most transactions are taking place. Since mid-June, the average difference between the FCA midpoint and the in-warehouse assessment has been $15.2 /t for duty-paid material and $14.8 /t for duty-unpaid material.
Together, the assessments provide complementary market references – the in-warehouse price offers a clear, single point suited to exchange use and comparison with established warehouse benchmarks, while the FCA range reflects common trading practices and captures a broader spread of market activity. Covering both duty-paid and duty-unpaid material further ensures the assessments reflect the relevant market distinctions for participants.
As the European aluminium market evolves, the launch of CRU’s weekly FCA premium assessments complements its established in-warehouse assessments and provides a broader view of market pricing. The new assessments reflect the FCA basis used in the vast majority of transactions, while capturing a range of market levels and relevant material characteristics.
This reflects CRU’s commitment to evolving its price intelligence in line with market needs. The assessments are available to CRU Aluminium Monitor subscribers. To learn more about the assessments, their methodology and potential use cases, contact us here.
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