Our Price Explained
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Evolution of Low-Carbon and Zero-Carbon Aluminum Price Assessments
Evolution of Low-Carbon and Zero-Carbon Aluminum Price Assessments
At a time when ESG is fast becoming a core strategy for companies worldwide, the case for low-carbon aluminum pricing tools is a compelling one. However, a lack of transparency — as well as consensus — regarding the definition, quantification, and understanding of low-carbon aluminum's value have proven to be formidable obstacles.
That lack of clarity and transparency were behind Platts decision to launch its low-carbon aluminum price (LCAP) and zero-carbon aluminum price (ZCAP) assessments, starting with the European market. The assessments complement existing offerings for high-grade primary aluminum, while helping market participants quantify cost, manage risk and spot opportunities associated with the growing focus on carbon-reduction strategies.
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What are Low-Carbon and Zero-Carbon Aluminum Price Assessments?
What are Low-Carbon and Zero-Carbon Aluminum Price Assessments?
The Platts LCAP, assessed as a premium to the LME cash-settlement price, applies to primary aluminum with a maximum emissions level of 4 metric tons (mt) of CO2 per mt of aluminum at the smelter. Other quantities and emission levels are normalized to this basis. Platts only includes aluminum in this assessment which has had its smelter Scope 1 and 2 emissions certified by an internationally accepted, independent organization.
The Platts ZCAP for primary aluminum leverages Platts existing CORSIA-eligible carbon-credit price assessments (Platts CEC) to calculate the voluntary cost of offsetting the carbon emissions of the LCAP assessment to zero.
The ZCAP is a calculated assessment using the following formula: ZCAP = LCAP + (4*CEC), where CEC is the Platts CEC price for that day.
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How does Platts assess Low-Carbon and Zero-Carbon Aluminum Price Assessments?
How does Platts assess Low-Carbon and Zero-Carbon Aluminum Price Assessments?
The assessments for primary (P1020) aluminum reflect Good Western-origin, minimum 99.7% aluminum ingot meeting London Metal Exchange high-grade specifications. Both LCAP and ZCAP assessments reflect typical shipments of 100–1,000 mt, in-warehouse Rotterdam, on a duty-paid and duty-unpaid basis, net-30 day payment terms, in US$/mt.
Platts will publish pricing information throughout the day on our real-time platforms, as well as the final assessments after 4:30 p.m. GMT. Commentaries highlighting current market trends and providing more detailed market insights also will be published in Platts Metals Daily, on the fixed pages PMA421 and MTL421 of the Platts real-time alerts and in the Platts database under the above-mentioned codes.