Also known as: IPP
Import parity is a price-setting mechanism for a commodity in which the price is set based on the cost of importing the commodity into a location.
Import parity is calculated as the cost of the commodity in the source location, plus the cost of delivery to the destination.
Import parity pricing is typical in a market that is consistently short of a commodity and importing marginal supply from another market.
Import parity pricing can occur either through market forces or be set directly through contracted terms.
FIND OUT MORE
The Refinery Reference Desk includes content derived from our industry experts as well as from public data sources such as company websites. Nothing herein is intended to serve as investment advice. This material is based on information that we believe to be reliable and adequately comprehensive, but we do not represent that such information is in all respects accurate or complete. McKinsey Energy Insights does not accept any liability for any losses resulting from use of the content.