1. Formation of the SMM FOB Indonesia P0610A and P1020A Spot Export Premium
Background: Indonesia boasts a unique geographical location, connecting the Pacific and Indian Oceans, making it a critical global maritime transportation hub. Additionally, the country is rich in mineral resources, such as oil, natural gas, coal, as well as bauxite, nickel, and copper. Benefiting from abundant energy and mineral resources, Indonesia's aluminum industry has experienced rapid development in recent years, attracting the attention of numerous aluminum enterprises. In the future, as more aluminum smelters are commissioned, exports are expected to continue rising. According to SMM data, over the next 2 to 3 years, Indonesia is expected to commission more than 800,000 mt of aluminum capacity, with subsequent planned projects including large-scale aluminum projects exceeding 1 million mt in capacity. As these projects gradually come online, Indonesia will transition from a net importer to a net exporter of aluminum ingots. Under this trend, a spot aluminum trade system centered on Indonesia and extending to Southeast Asia and even Asia will become increasingly prominent. At that time, Indonesia's FOB price is expected to become a key reference for aluminum ingot trade settlements in the region and attract widespread attention from the global market.
The SMM FOB Indonesia P0610A and P1020A spot export premium is formed and published based on this methodology and can be used by trading parties as an indicative price reference for FOB Indonesia P0610A and P1020A spot trade settlements. This price reflects the price range of actual or potentially tradable spot transactions at the time of publication of the FOB Indonesia P0610A and P1020A spot export premium on each full working day. It will officially launch on April 1, 2025, and historical prices will be available on the SMM website (metal.com).
1.1 Price Definition
Definition: The transaction premiums for P0610A and P1020A aluminum ingots delivered FOB at Belawan, Bahodopi, and other ports in Indonesia were compared to the LME 3-month plus qp swap.
1.2 Sources of Raw Data and Requirements for Price Submitters
1.2.1 Requirements for Smelters
a. Must have a standardized sales model, smooth sales channels, relatively stable sales volumes, a certain level of influence and reputation, operate legally and with integrity, and maintain a good market reputation.
b. Must objectively and truthfully report the actual situation of their production and sales, including production, operating rate, product quality, selling price, sales volume, sales destinations, and product inventory, and maintain good communication with SMM price analysts on these matters.
c. Must have some judgment and expectations regarding the macroeconomic situation and spot aluminum market transactions and maintain good communication with SMM price analysts on these matters.
1.2.2 Requirements for Traders
a. Must have been engaged in spot aluminum ingot export trade for more than one year, with an average annual purchase or sales volume of at least 50,000 mt, a standardized purchase and sales model, smooth purchase and sales channels, relatively stable purchase and sales volumes, a certain level of influence and reputation, operate legally and with integrity, and maintain a good market reputation.
b. Must objectively and truthfully report the actual situation of their aluminum procurement and sales, including product quality, purchase and sales prices, purchase and sales volumes, sources of procurement, and sales destinations, as well as product inventory, and maintain good communication with SMM price analysts on these matters.
c. Must have some judgment and expectations regarding the macroeconomic situation, the aluminum market industry status, and market transactions, and maintain good communication with SMM price analysts on these matters.
1.2.3 Requirements for Downstream Enterprises
a. Must objectively and truthfully report the actual situation of their procurement, including product quality, purchase price, purchase volume, sources of procurement, and inventory, and maintain good communication with SMM price analysts on these matters.
2. Price Collection Methods
SMM will collect relevant data on FOB Indonesia spot prices from price submitters' designated contacts through phone, QQ, WeChat, fax, and email on a regular basis (between 10:30 a.m. and 12:00 p.m. on each trading day) as per the agreement with price submitters. Price data submitted after 12:00 p.m. will not be considered for the day's price assessment, and incomplete data lacking the minimum required details will not be used even if submitted before the deadline. The price data may include prices of concluded transactions, the most likely expected transaction prices, offers, and counteroffers. The frequency of price collection will depend on the trade volume and frequency of each price submitter, and not all contracted units will be contacted daily, but at least twice a week.
2.1 FOB Indonesia P0610A and P1020A Specifications
The minimum standard requires aluminum purity of 99.7% and 99.85% (with a maximum of 0.1% Si and 0.2% Fe).
2.2 Transaction Prices/Counteroffers/Offers
The quoted prices must be the actual transaction, counteroffer, or offer price data of the price submitter or the transaction, counteroffer, or offer price data of other market participants, or the market price range. The unit is $/mt, without decimals.
2.3 Quantity
The transaction volume per deal must be at least 500 mt.
2.4 Payment Terms
Payment terms under negotiated trade agreements, such as bank remittance or letter of credit.
2.5 Delivery Location
Port delivery.
2.6 Payment Methods
LC, DP, TT, or cash wire transfer.
2.7 Pricing Unit
$/mt.
2.8 Presentation Format
Presented in a range format, as a tax-exclusive price in US dollars.
2.9 Publication Time
12:00 p.m. on each trading day (excluding Chinese statutory holidays and weekends).
3. Price Assessment Process
SMM conducts price assessment work from 11:00 a.m. to 12:00 p.m. on each working day. The specific process is as follows:
3.1 Price Publication
SMM will form prices based on the following standards and regulations and publicly release them on the SMM official website www.smm.cn.
The publication time is 12:00 a.m. on each Chinese statutory working day during the trading morning.
The publication time may also be affected by various emergencies and force majeure factors, such as power outages and natural disasters. In such cases, SMM will make every effort to inform the market of the delayed price publication time as soon as possible.
3.2 Revision of Published Prices
After the price is published, if any errors are found, whether caused by incorrect operations or calculation mistakes, SMM will promptly issue a correction announcement and amend the error.
4 Methodology Changes
All markets evolve, and SMM has the responsibility to ensure that the methodology for market reporting evolves in sync with the market. Therefore, SMM will conduct regular internal reviews of the methodology's appropriateness based on industry feedback. For all substantial but non-urgent potential changes, SMM will follow a formal external consultation process. Major changes will then be announced with at least 28 days' notice, inviting industry participants to comment, unless special circumstances, particularly force majeure (natural disasters, wars, exchange bankruptcies, etc.), lead to a shortened notice period.
If you have any questions, please contact SMM, Keira Yu, at 17862899582, 021-20707848.
