Announcement on the addition of SMM low-carbon aluminum price points [SMM announcement]

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In order to fully reflect the domestic low-carbon aluminum market price, objectively, truly and timely reflect the supply and demand situation of China's low-carbon aluminum market, and find the changing law and reasons of the benchmark price of low-carbon aluminum, so as to provide a reference basis for the scientific decision-making of low-carbon aluminum industry enterprises, research institutions and government departments. After a period of precipitation and market research, SMM plans to release the benchmark price of SMM low-carbon aluminum from December 27th for market reference.

General principles of SMM Price Methodology

Shanghai Nonferrous Network (hereinafter referred to as SMM) is a completely independent third-party service organization, which does not participate in any substantive transaction, but maintains close communication with the buyer or seller of the transaction as a market observer or organizer, and provides relevant services for the market. By communicating with industry insiders, SMM continuously develops, reviews and revises its methodology to adopt the most common product specifications, terms of trade and terms of trade in the industry. And pay equal attention to the normal transactions that meet the specifications and standards. SMM reserves the right to exclude any price data information deemed to be unreliable or unrepresentative from its price assessment.

SMM publishes daily spot metal prices (or indices, etc., including the Chinese market or markets outside China), often referred to as SMM prices. SMM has formulated the corresponding methodology for the published SMM prices (all will be published on SMM's official website www.smm.cn for inquiry). The methodology stipulates the methods and procedures for the formation and release of SMM prices, and forms and publishes SMM prices in strict accordance with the provisions of the methodology.

In order to meet the actual situation of the spot market, SMM will make necessary amendments to the SMM price methodology and make an announcement on SMM's official website www.smm.cn 28 days before its official implementation, unless the notification period is shortened due to special circumstances, especially force majeure (natural disasters, war, exchange bankruptcy, etc.). If you have any questions or suggestions about SMM price and its methodology, please contact SMM customer service personnel (please check the contact information on SMM's official website www.smm.cn). Please read this paragraph in conjunction with SMM methodology review and change policy, and SMM complaint policy.

This document sets out the setting standards and management methods for the benchmark price of SMM low-carbon aluminum. The purpose of SMM in formulating this standard is to establish a transparent and verifiable SMM pricing mechanism to provide an important pricing indicator for market participants.

The formation of the benchmark price of SMM low-carbon aluminum

2.1 definition, background and meaning

Background of the release of SMM benchmark price for low-carbon aluminum: with the impact of China's carbon peak and carbon neutralization policy, China's electrolytic aluminum industry has been focused on, and in the process of the landing of the "dual-carbon" policy, a low-carbon aluminum consumer market has been formed. Low-carbon aluminum is not a new vocabulary. with the global understanding of carbon emissions, low-carbon, green and sustainable development has formed a consensus, and the low-carbon aluminum market arises at the historic moment in the world. Including Rusal, Alcoa, Hydro and other overseas aluminum companies have announced their own low-carbon aluminum brands, downstream and terminal aluminum applications in the same period. Including BMW, Mercedes-Benz, Tesla, Apple and other companies have put forward the demand for low-carbon certification of aluminum raw materials. Although the Chinese market started relatively late, the Chinese electrolytic aluminum market is used in many terminal fields, such as construction, transportation, packaging and so on. Only the annual export volume of intermediate aluminum processing materials is more than 5 million tons, so it is inevitable that Chinese enterprises are in line with international rules. What is gratifying is that China's low-carbon aluminum market has quietly taken shape. According to SMM statistics, electrolytic aluminum enterprises with hydropower as the main power source, including Yunnan, Qinghai, Sichuan, Chongqing and other provinces, have an annual output capacity of more than 8 million tons per year. These aluminum plants will become the first shortlisted suppliers of low-carbon aluminum in China, and with the adjustment of domestic electrolytic aluminum power structure, photovoltaic, wind energy, biological energy and other green energy will be added. The scale of low-carbon aluminum in China is bound to continue to increase.

Here, we find that there is an urgent need for the market to compile and release a price that can fully reflect the domestic low-carbon aluminum market price, in order to objectively, truly and timely reflect the supply and demand situation of China's low-carbon aluminum, so the SMM low-carbon aluminum price arises at the historic moment. Through the analysis of the price, we find the change law and reasons of the benchmark price of low-carbon aluminum, so as to provide a reference basis for the scientific decision-making of low-carbon aluminum suppliers, terminal consumer enterprises, research institutions and government departments.

Definition:

The benchmark price of SMM low-carbon aluminum is an indicative price formed and issued by SMM according to this methodology and can be used by both parties as a reference for the settlement of low-carbon aluminum spot trade. The price reflects that when the benchmark price of SMM low-carbon aluminum is released on every complete working day, it is a price benchmark according to the indicative range of the benchmark price of low-carbon aluminum in the warehouse that is most likely to be traded within the technical indicators defined by SMM, and the pricing of low-carbon aluminum outside different technical indicators or technical indicators can be used as a price benchmark for price premium or discount. The price is mainly based on the spot trading price of low-carbon aluminum in China on that day.

The significance of releasing the benchmark price of SMM low-carbon aluminum:

2.2 A brief introduction to the mode of formation

SMM low-carbon aluminum price consists of three parts, the first is the spot benchmark price of electrolytic aluminum, the second is the weighted carbon emission difference between low-carbon aluminum enterprises and national electrolytic aluminum enterprises, and the third is the carbon price part.

In the spot price part of electrolytic aluminum, SMM collects the data information used to evaluate the SMM low-carbon aluminum benchmark price by collecting the standard (that is, collecting the original data information in accordance with the SMM data standard policy), including the quotation suggestions provided by the bid-adopting unit (that is, the data provider) for both buyers and sellers that did not conclude the transaction on the same day, the spot transaction price proposal provided by the bid-adopting unit, or other price suggestions, etc. The quantity of each shipment that can be included in the standard data information is not less than 50 tons. The data collection and evaluation (calculation) of the SMM low carbon aluminum benchmark price, as well as the day-to-day management are completed by the SMM Aluminum Business team (setting up A post B post and three members of the price manager).

In the carbon difference part, as low-carbon aluminum involves the difference in carbon emissions of electrolytic aluminum enterprises, SMM will introduce the current weighting value of carbon emissions of domestic electrolytic aluminum enterprises to calculate the difference between low-carbon aluminum and national carbon emissions. SMM updates the difference between the low-carbon part of the national electrolytic aluminum enterprises and the national weighted average every quarter. And with the change of energy structure of electrolytic aluminum enterprises, the quarterly carbon difference will change.

As for the carbon price, SMM introduced the closing price of CEA in the national carbon market announced by the Shanghai Environmental Energy Exchange.

(CEA: carbon emission quota, the measures for the Administration of carbon emissions Trading (trial) promulgated by the Ministry of Ecology and Environment (Ministry decree No. 19) and the rules for the Administration of carbon emissions Trading (trial) (announcement No. 21 of 2021), it is clear that the trading products of the national carbon emissions trading market are carbon emission quotas, and the Ministry of Ecology and Environment may timely add other trading products in accordance with the relevant national regulations. Carbon emissions quota trading is denominated in the "carbon dioxide equivalent price per ton". The minimum change in the declared volume is measured as 1 ton carbon dioxide equivalent, and the minimum change in the declared price is 0.01 yuan. )

2.3 Source of raw data information

According to the following criteria, SMM will select representative market participants from the tangible industry chain as the target bidders of SMM light low-carbon aluminum benchmark prices (that is, data providers, including production enterprises, trading enterprises and downstream enterprises, etc.). SMM will take all reasonable precautions to determine and verify the authenticity and reliability of each standard acquisition unit. SMM's program is designed to minimize the risk of using any abnormal price data and to oppose any manipulation of the price index.

The SMM policy includes, but is not limited to, the following steps:

Collect relevant public domain documents (such as business licenses, etc.) for each standard adoption unit and verify the authenticity of the documents to ensure that each standard acquisition unit is a participant in the transaction, purchase, sale or production of the industry chain of related low-carbon aluminum products.

Ensure that each employee designated as the contact person of the standard adoption unit has direct access to the relevant data in the company and has the necessary authority and ability to submit the data to the price analyst of SMM in a timely manner. Verify the reputation of each bid adoption unit by lobbying other reputable market participants.

SMM selects the standard-adopting units according to the above-mentioned standards, and forms a relatively stable list of standard-adopting units. In order to ensure the smooth development of the standard acquisition work, SMM will reach an agreement with each bid adoption unit in writing or not to ensure that the price data information is accurate and timely. At the same time, protect the corporate secrets of the standard-adopting units. SMM arranges the full-time price analyst to adopt the standard from the full-time contact person arranged by the bid-adopting unit, and communicates with the market situation related to the price data and information. SMM will continuously evaluate each standard-adopting unit according to the above criteria and adjust the list of standard-adopting units according to the evaluation results. For those units whose evaluation results do not meet the above criteria, SMM will include them in the list to be rectified and notify them to make corrections within a time limit. If, within 30 days after the notice of rectification is issued, the bid-adopting unit refuses to make rectification or does not meet the standards after rectification, SMM will terminate the qualification of its bid-adopting unit.

According to the agreement reached, the price analyst will collect data and information about the benchmark price of SMM low carbon aluminum from the contact person of the bid adoption unit on a regular basis by telephone, QQ, Wechat, fax and e-mail (in principle, every working day, if the processing fee is adopted twice a week). (the price data information submitted last time will not be used as the basis for today's price evaluation. Incomplete data that does not contain the minimum information details required will not be included in use even if submitted before the deadline. The price data information can include the specific price of the transaction on the same day or the processing fee based on the low-carbon aluminum price, the expected pending transaction price or the processing fee based on the low-carbon aluminum price, etc., offer, counter-offer, etc. All instant messaging content, email communication content and any face-to-face communication records will be archived; phone communication details will be summarized and entered into the database. The price data information must be a typical, repeatable transaction between non-affiliated market participants (financially and legally independent).

SMM price analysts are required to observe a code of business ethics when reporting to their supervisors any forced or threatened communication from market participants, or any kind of induced offer that attempts to influence the outcome of the assessment. The price data information provided by the bid-adopting unit to SMM shall include at least the following contents, and the price analysts of SMM shall encourage the bid-adopting unit to submit as much detailed information as possible, not just the prescribed minimum requirements:

2.4 the formation of the benchmark price of SMM low-carbon aluminum

Due to the complex technical parameters of low-carbon aluminum, the benchmark price of low-carbon aluminum of SMM only reflects the specifications and technical parameters of low-carbon aluminum defined by SMM itself. The range of specifications and technical parameters specified in the benchmark price of low-carbon aluminum defined by SMM is detailed in the following 2.5.

Price formula of low carbon aluminum

SMM low carbon aluminum price = same day SMM Foshan spot aluminum price + (quarterly weighted carbon emission value of national electrolytic aluminum enterprises-quarterly weighted carbon emission value of Yunnan electrolytic aluminum enterprises) * previous trading day national carbon emission quota (CEA) closing price

2.5 SMM low carbon aluminum price specifications and technical parameters range

The benchmark price is the spot price of aluminum ingots in Foshan area, and the announcement agency is Shanghai Nonferrous Network.

Subject matter: A00 aluminum ingots refer to the national standard to meet the "remelting aluminum ingots" GB/T 1196-2017 for the "Al99.70" brand requirements;

Carbon emission difference: according to the carbon emission model updated quarterly by SMM, the difference between the weighted carbon emission value of the four major aluminum enterprises in Yunnan and the weighted carbon emission value of the whole country;

Carbon price: refer to the closing price of CEA in the national carbon market the previous trading day, as announced by the Shanghai Environmental Energy Exchange.

The main standard brands: Yunnan Aluminum Co., Ltd., Yunnan Shenhuo, Yunnan Hongtai, Yunnan Qiya, etc., the range of low-carbon aluminum currently selected involves electrolytic aluminum production enterprises represented by Yunnan Hydropower. In addition, the newly shortlisted low-carbon aluminum enterprises need to pass the CQC (China quality Certification Center carbon footprint) certification of less than 4 tons of carbon dioxide emissions, or to meet the SMM non-cradle-to-gate carbon dioxide emissions of less than 2.5 tons.

With reference to the transaction volume, SMM defines the typical transaction volume that reflects the market circulation as 50-2000 tons per transaction.

The mode of delivery shall be delivered on the same day and shall be mentioned by the buyer; the mode of transport is motor transport

The method of payment will be cashed by the bank and will arrive on the same day.

The place of delivery is provided by the social warehouse (or the manufacturer needs to convert the freight)

Unit RMB / ton

The form of expression is in the form of absolute value, including tax price (including 13% VAT).

Release time 10:15-10:30 on every working day (except Chinese statutory holidays and weekends)

2.6 Methodology change

All markets are changing, and SMM is responsible for ensuring that the methodology for market reporting changes with market Synchronize. As a result, SMM conducts regular internal reviews of the appropriateness of the methodology based on industry feedback. SMM will follow the formal external consultation process for all substantive and non-urgent potential changes. Major changes are then announced and at least 28 days' notice is given, inviting comments from the industry, unless special circumstances, especially force majeure (natural disasters, wars, exchange bankruptcies, etc.) shorten the notice period. SMM promises to scrutinize all comments about proposed methodological changes, but in some cases it may have to change the methodology against the wishes of some market participants. In addition, SMM has a formal methodological consultation process. SMM promises to hold a formal consultation on the low-carbon aluminum report at least once a year. The date of the last consultation and the deadline of the SMM's commitment to hold the next consultation are at the top of the methodology document. For details, see SMM Methodology Review and Policy change.

For an in-depth understanding of SMM low-carbon aluminum price methodology, you can communicate at any time:

Feedback email: liuxiaolei@smm.cn

Contact: Mr. Liu

Wechat and telephone number: 15021973263