A pricing agency for sustainable metals linked to the London Metal Exchange published its first premiums in recent weeks for copper and aluminium.
Below are details of the first premiums from Commodity Pricing and Analysis Ltd, owned by the parent of the LME, how it calculated them and reaction from some producers.
Zero copper premium
CPAL on 1 October published on the LME Insight website a zero premium for sustainable copper which meets sustainability factors and has 4 tonnes or less of carbon emissions per tonne of metal over the usual premium in Rotterdam for LME Grade A metal of US$130-US$180 a tonne.
Premiums are on top of the LME futures price.
“Market feedback indicated limited evidence of an incremental premium for sustainable copper cathode over standard Grade A material,” it said.
In terms of carbon emissions, however, 4 tonnes is the global average for refined copper, according to the International Copper Association, and several firms market copper with much lower levels.
Austrian smelter Montanwerke Brixlegg is offering copper with 0.63 tonne of carbon per tonne of metal for a premium of €398 a tonne for 2027.
“Actual green cathodes command a substantial green premium over regular cathodes,” an official of Brixlegg told Reuters.
Data provider Fastmarkets uses 1.5 tonnes of carbon emissions for its low-carbon premium of US$363 per tonne.
Aluminium in line with rivals
CPAL released on 24 September its first premium for aluminium meeting a range of sustainability criteria and having 8 tonnes or less of carbon emissions per tonne of metal at US$25-US$35 a tonne in Rotterdam.
That is over the standard premium of US$445-US$470 per tonne for P1020A metal, which is high-purity aluminium.
That was largely in line with established assessments, such as Fastmarkets premium for low-carbon metal at US$22.50 a tonne, even though it uses a much lower threshold of 4 tonnes of carbon per tonne of metal.
European producer Hydro (OL:NHY) told Reuters that the CPAL launch was “an interesting step”, but most current premiums are established through bilateral agreements.
“Any benchmark will need clear and robust definitions and sufficient underlying market activity to be representative.”
Methodology
Under methodology created early this year by CPAL, the primary input it aimed to use to create sustainable premiums was executed trades from spot platforms or bilateral transactions.
Last year, the LME announced a collaboration with online trading platform Metalshub, which it said would provide trading data to an independent agency to create robust premiums for sustainable metals, but so far this has not materialised.
A second tier of data would be firm bids and offers on trading platforms, and a third category was market assessments, but those were deemed less transparent and verifiable.
CPAL said the first two premium prices for copper and aluminium were based on the third category, as neither trades nor firm bids/offers on trading platforms were available.
($1 = 0.8921 euros)
(Reporting by Eric Onstad; Editing by Jan Harvey)
Image: Unsplash
