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Low-carbon aluminum increasingly popular among Asian end-users

End-users in Asia are paying additional premium for low-carbon aluminum products, reflecting increasing recognition of green metals in the course of global decarbonization.

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Russia's largest aluminum producer Rusal sold low-carbon non-value added aluminum products with an upcharge of $5/mt for carbon emissions below 8 mt, and upcharge of $30/mt for carbon emission below 5.3 mt to a Chinese end-user, for delivery to Qingdao port from September to December, 300 mt per month, according to a company source.

Upcharge is the premium on top of normal aluminum product paid for 'green' metal.

"Low-carbon aluminum product is able to capture a premium compare to normal aluminum product since 2020 in China market," a source said.

China made a significant climate commitment in 2020 to reach peak CO2 emissions by 2030 and net-zero by 2060.

A handful of producers, including Alcoa, Century, Hydro, Rio Tinto and Rusal, have been leading the charge in reducing their carbon emissions.

Upcharge for LCA is on an uptrend in Southeast Asia market as well, with more end-users putting efforts into cutting carbon emissions.

"End-users are driving low-carbon aluminum demand, and I believe more companies will follow the suit," an aluminum trader said.

Upcharge for low-carbon non-value added aluminum products was traded at $5/mt for 2022 annual contract between a producer and a Southeast Asia buyer, which increased from $1/mt in 2021, and flat in 2020.

The aluminum industry averages some 16.7 mt of CO2 emissions per mt of aluminum produced, on a cradle-to-gate basis.

S&P Global Platts has launched new daily low-carbon aluminum price (LCAP) and zero-carbon aluminum price (ZCAP) assessments, starting with the European market, effective April 6, 2021.