London Metal Exchange CEO Matthew Chamberlain has expressed doubt over sourcing aluminum from exclusively low-carbon sources in the short term.
“There have been calls for us to exclude high-carbon production, but we don’t think that’s the right thing to do because there simply would not be enough aluminum on the market,” Chamberlain said on Oct. 11 in an interview with Bloomberg Markets and Finance.
Prices on the LME would also be significantly higher than they are now, he warned.
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LME aluminum price on the rise
The LME’s three-month bid price for the base metal reached $3,019 per metric ton Oct. 11. That is up by one-third from $2,254 on April 12, data from the bourse showed.
Higher demand, plus production cuts in China, have helped to sharply boost benchmark aluminum prices over the past six months. The world has also faced supply chain disruptions as the global economy restarts after the COVID-19 pandemic.
Chamberlain could not say how much of a premium end-users would potentially pay on the base metal with a low-carbon footprint.
The LME’s announcement on the same day of its plans to collaborate with Düsseldorf-based spot trading platform Metalshub would help buyers to acquire the greener aluminum as well as to determine potential premiums, he said.
“What we foresee is a world where you have the LME to deal with high-level hedging … but there is a more digital way where you can then go and source specific parcels of metal with specific sustainability characteristics like low carbon,” Chamberlain stated.
Future of aluminum
Responding to a question over whether or not the exchange would potentially no longer accept “dirty” aluminum, Chamberlain stated that he did not rule it out in five to 10 years, as views on carbon vary.
“People have different views on the carbon footprint of our product, and that’s why we believe that disclosure and user choice is the right way to deal with it,” Chamberlain said.
“I certainly think the world could end up there,” where only lower-carbon is available, Chamberlain noted.
The bourse already does not accept metal that has exploited child labor or that has supported conflict financing as the world has decided that those are negative things, he added.
Chamberlain made the statements at the start of the LME Week, which is taking place in 2021 from Oct. 11-15. The event is an annual get-together for metal industry participants along the entire supply chain. The week includes seminars on trends and outlooks, along with networking sessions and the LME Dinner.
Events for the week in 2021 are more curtailed due to ongoing concerns over the COVID-19 global pandemic.
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