CFTC plans to overhaul aluminum pricing in US
XLB•The CFTC is examining reforms to US aluminum pricing and whether new contracts could improve transparency. The Midwest premium reached a record $1.19 per pound in June, while the all-in price for US consumers topped $6,000 per ton.
1. Review of pricing mechanisms
CFTC Chairman Michael Selig said he directed the agency’s global markets team to examine US aluminum pricing mechanisms and develop reform options. US consumers typically pay the London Metal Exchange benchmark price plus the Midwest premium, assessed by Platts, to cover costs including freight, insurance and taxes.
2. Premium and contract options
The Midwest premium reached a record $1.19 per pound, or about $2,620 per metric ton, at the start of June, more than double its level a year earlier. Selig said the CFTC would consider whether more US-based aluminum contracts could improve local price discovery and provide commercial users with more hedging options, but said their usefulness would depend on market participation. Platts said its premium is an independent, voluntary reference based on bids, offers and transactions in the physical spot market, and that its methodology was rigorously tested.
