However, aluminium is important for the energy transition, including in the auto industry where it is valued for its lightweighting properties in electric vehicles.
The LME has resisted calls to launch a low carbon aluminium contract as that would undermine liquidity on its existing primary aluminium contract, which has the highest volumes of any contract traded on the exchange.Metalshub already facilitates spot trading of ferro alloys such as ferromolybdenum and ferrovanadium used to make steel.
The exchange, established in 1877 above a hat shop in Lombard Court, London, is aiming to provide greater transparency, access to sustainably produced metals and ensure responsible sourcing across metal supply chains.
“The LME will set the parameters for the low carbon aluminium with Metalshub,” said LME Chief Executive Matt Chamberlain in an interview as the metals industry gathered in person for LME Week, an event which took place virtually last year because of the coronavirus pandemic.
“The LME isn’t generally a source for physical metal, it is mostly used for financial hedging. On the platform, customers will be able to choose specific brands and delivery locations.”
Chamberlain declined to give any financial details of the project, but said the platform would be used to test new products, and see how trading and pricing evolve.
“When it becomes a good liquid spot market we can take it to the stage of a futures contract on the LME.”
Successful new contracts would help boost revenues for the exchange, which has seen its volumes slide since the pandemic temporarily closed the floor or open outcry trading in March 2020.
Metalshub expects its turnover to more than triple this year to about 1 billion euros after big firms stepped up usage, including miner Anglo American.