Platts proposes to launch daily Japan, Asia low-carbon aluminum assessments

Platts, part of S&P Global Commodity Insights, is proposing to launch daily low-carbon aluminum premiums for Japan and Asia and corresponding all-in calculations based on underlying spot and quarterly contract prices, effective Jan. 2, 2025.

Platts has observed increased interest in valuing the price differential for low-carbon aluminum in Asia, particularly in Japan. Preliminary feedback from market participants indicates that Asia's demand for low-carbon material is expected to rise amid industry-wide efforts to reduce and account for carbon emissions from the aluminum value chain.

The Japan Low-Carbon Aluminum Premium (Japan-LCAP) and Asia Low-Carbon Aluminum Premium (Asia-LCAP) assessments would reflect the spot premium or discount over standard P1020A aluminum for low-carbon aluminum with total certified direct and indirect emissions associated with aluminum smelting, typically considered by market participants as Scope 1 and 2 emissions, of 4-mt equivalent (mte) or less of CO2 per ton of aluminum.

The Japan-LCAP would cater to material delivered into Japanese main ports while the Asia-LCAP would represent cargoes delivered to the rest of Asia, with South Korea's Incheon as the basis port.

Consistent with Platts exclusion of Russian material from its CIF Japan Spot Aluminum premium assessment (MMANA00) and CIF Japan Forward Quarter Aluminum premium assessment (AAFGA00), Platts proposes to exclude Russian material from its Japan-LCAP assessment and all-in calculations. The Asia-LCAP assessment would be open origin, in line with the underlying specifications for Platts CIF Main Asian Ports Spot Aluminum Premium (AAFGG00).

Three daily calculated low-carbon aluminum all-in prices would also be added to complement the proposed low-carbon premium assessments. They are:

Proposed specifications for the new assessments and calculations can be found in the table below:

Platts is seeking feedback on the minimum or typical volume observed for low-carbon aluminum spot transactions. The volume for the proposed specifications accounts for typical seaborne shipment via containers, considering preliminary feedback that low-carbon aluminum transactions may be of smaller volumes as compared to that of standard P1020A.

The Japan-LCAP and Asia-LCAP, which would expand Platts existing low-carbon aluminum coverage in Europe and the US, would include material with 4-mte or less of CO2/mt certified by an internationally accepted, independent organization. Market participants would be expected to supply proof of such certification upon request. Platts is also seeking further feedback on the certifications recognized for low-carbon aluminum specifications.

Trade in aluminum products using offsets to reduce overall emissions profiles, such as credits sourced from voluntary carbon markets, would not be considered for inclusion in these assessments.

In the absence of observable spot market activity, Platts may consider other verifiable data reported.

Platts Japan-LCAP and Asia-LCAP assessments and related all-in prices would be published in Metals Daily, Metals Weekly, on Platts Metals Alert on fixed pages PMA/MTL0107, PMA/MTL0108, PMA/MTL0419 and PMA/MTL0650 and in the Platts price database.

Full aluminum specifications can be found in the Global Nonferrous Metals specifications guide here.

Platts invites feedback, comments and questions on this proposal to platts_mjp_moc@spglobal.com and pricegroup@spglobal.com by Dec. 13, 2024.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available to the public upon request.