PRICING NOTICE: Fastmarkets launches market consultation on low-carbon aluminium pricing

Fastmarkets invites all aluminium market participants to provide feedback on its initiative to price the physical low-carbon aluminium market.

Specifically, Fastmarkets seeks feedback on proposed specifications of low-carbon aluminium, the type of pricing mechanism used to perform price discovery for low-carbon aluminium and the products and locations in which low carbon aluminium should be priced.
The initiative comes amid growing demand for price discovery for low-carbon aluminium in recent months. Market participants continue to expect the market for low-carbon aluminium to grow following green stimulus packages from global governments to spur economic development after Covid-19 lockdowns.
The consultation will be open for three months and close on December 1, 2020.
Definition of low-carbon aluminium
Possible options include:
Definition provided by Carbon Trust - A “lower carbon primary aluminium” label should be defined by a current threshold of 4tCO2e per tonne of aluminium for the process emissions from aluminium electrolysis, anode production and aluminium casting.
Aluminium Stewardship Initiative - Smelters that meet the 2030 ASI Performance Standard of 8t of CO2eq per tonne produced (scope 1 and 2).
Brand distinction - Using a list of brands that advertise themselves as “green aluminium”.
Type of pricing mechanism
Possible options include:
An upcharge – Publishing an “upcharge” for green aluminium on top of existing Fastmarkets aluminium premiums. For example, a P1020A Rotterdam low-carbon upcharge, to be added on top of the current P1020 Rotterdam duty unpaid and duty paid premiums.
A separate premium - Develop and launch a completely different premium, tailored specifically to reflect premiums for low carbon billet and P1020 alongside Fastmarkets’ current suite of aluminium premiums.
Differentiation of green brands in current premiums – Publish where low-carbon aluminium brands are bid, offered, traded, and assessed, alongside deals heard, within the rationale of existing P1020 and billet premiums, to shine transparency on the commodity class.
Product and location
Fastmarkets also invites feedback on whether a new low-carbon aluminium pricing mechanism should be launched for just primary aluminium, P1020A, or for aluminium value-added products such as billet and foundry too.
In addition, we are also open to discussion on the regions it will cover – whether it should be just for Europe or cover the United States market too.
To provide feedback on this consultation, please contact Alice Mason and Justin Yang by email at pricing@fastmarkets.com. Please add the subject heading ‘FAO: Alice Mason/Justin Yang, re: Green Aluminium.'
There will also be an opportunity to discuss this topic at the Fastmarkets International Aluminium conference, which will take place virtually on September 21 – 23. 
To see all Fastmarkets’ pricing methodology and specification documents go to https://www.fastmarkets.com/ about-us/methodology.

Justin Yang

justin.yang@fastmarkets.com

Alice Mason

alice.mason@fastmarkets.com

Published

Justin Yang

Alice Mason

September 01, 2020

08:29 GMT

London