First Trades of CRU Settled LME Alumina Contract

The London Metal Exchange's Alumina contract has commenced trading. This is settled on a basket of CRU's alumina price, the CRU-API, and Fastmarkets' FOB Australia alumina index. Multiple lots of 50 t were traded on Thursday 17 October 2019: at $284/ t for November 2019 and $294 /t on the January 2020 contract.

CRU's Alumina Price Index (API, Australia FOB) on the same day edged lower to $277.5 /t, with liquidity recently provided by alumina spot cargos sold to China. The latest physical market transactions involved two 30,000 tonnes Australian cargos sold at $302.00/t and $303/t China CIF respectively. IMO 2020 has resulted in the ocean freight cost between Western Australia and China increasing to $25.00/t for December 2019. This is up nearly $2.00/t compared to November deliveries.

As the physical market's leading, transaction-only price benchmark, the CRU-API is used widely in the settlement of physical contracts and accurately reflects true market fundamentals, incorporating verified physical trades from across the supply chain. As such, its use in the settlement of the LME Alumina futures contract is another natural application for the CRU-API. The now active LME alumina contract provides an ideal price risk management tool for physical market participants.