LME Criticized For Planned Launch of Green Aluminum Platform

SEATTLE (Scrap Monster): Various metal industry sources said that the London Metal Exchange (LME) need not have to introduce a separate platform to trade low carbon aluminum. Earlier in August this year, LME had announced plans to launch spot market for low-carbon aluminum, in a bid to boost sustainable metal production. The platform is being set for an early-2021 launch.

According to industry sources, the market has tools available with it for those customers who are willing to pay premium for sustainable material. As such, there is no need for a separate platform. The buyers could always ask for green aluminum and pay in excess of the basic price for additional requirements.

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The introduction of new green contract would split the liquidity too they pointed out. Incidentally, LME’s aluminum contract is one of the products that enjoy high liquidity. On sustainability, it should allow the market to decide, industry sources added.

Instead, the exchange should concentrate on products such as the euro-prices steel contract, which has been postponed as the Europe prices steel in Euros and the LME clearing house is presently designed to clear only dollar-based contracts.

It must be noted that a handful of aluminum producers including Norsk Hydro and Rusal who use renewable energy for metal making, have been demanding that their items be recognized as premium products.