LONDON- The London Metal Exchange does not need a separate platform to trade low carbon aluminum and should focus instead on services its users need more urgently, such as a euro-denominated steel contract, metal industry sources told Reuters.
As pressure mounts on investors and companies to prove their activity does not harm the environment, the exchange last month outlined plans to support sustainable metal production with a spot trading platform in the first half of 2021 for low carbon aluminum.
Ahead of a Thursday deadline for feedback, industry sources who asked not to be named said the market had the tools needed for consumers willing to pay a premium for sustainable metal.
“LME contracts give you a basic price. If you have additional requirements – location, producer, shape of metal, warehouse company – there will be premiums to pay,” a consumer source said.
“Buyers can ask for green aluminum and pay extra, you don’t need a new platform. (The LME) should be concentrating on things like the euro-priced steel contract.”
The LME said by email it looked forward to considering all market feedback.
Aluminum produced by Norsk Hydro and Russia’s Rusal is viewed as low carbon as it is smelted with hydropower, rather than fossil fuel.
It is used in construction, transport and packaging.
Last year, the LME launched a suite of cash-settled contracts including hot rolled coil steel for North America and China.