LME appoints sustainable metal pricing administrator

The London Metal Exchange (LME) has appointed Commodity Pricing and Analysis Limited (CPAL), based in Dubai, as a sustainability pricing administrator tasked to build out its operations with the aim of publishing price premia based on transparent transactions executed on Metalshub, a Germany-based trading platform.

In addition to using Metalshub, price premium calculations will be augmented where necessary with market intelligence based on physical trading of metal that meets the thresholds, according to the exchange.

CPAL is a new company established by the LME’s parent firm, HKEX (Hong Kong Exchange) Group.

The move is one of several announced simultaneously by the LME that it says will help drive forward its sustainable metal premium pricing plans.

“Our goal is to publish premium prices for sustainable metals, underpinned by robust definitions and real trading activity, which will enable our industry to unlock the potential value of sustainable metal production,” LME CEO Matthew Chamberlain says.

“We recognize that there may not be a premium for every metal, but there is a clear market desire to determine whether one exists, and the LME is keen to play a part in answering this question."

LME announced its plans to explore the potential for producing sustainable metal premium pricing this April.

In addition to the establishment of CPAL, other LME sustainability components include its enforcement of all LME-branded metals meeting its existing responsible sourcing standards.

“These will remain unchanged, and the LME will work towards discovering premium prices for copper, aluminum, nickel and zinc that are both LME-branded and possess enhanced sustainability credentials, going beyond the core globally agreed sustainability standards, but which are of increasing importance for many metal consumers,” the exchange says.

Documentation related to that will continue to be posted as sustainability data on the LMEpassport platform, which LME says currently holds more than 1,300 disclosures from LME-listed brands.

“Following significant market engagement, the LME has now set out its premium sustainability thresholds for each metal, incorporating both maximum carbon footprints and third-party sustainability assurances, based on internationally recognized methodologies,” LME says.

The energy and resource savings inherent in using recycled metal in the production of new ingots or billet is a common way to make low-carbon-footprint metal, along with using alternative, or nonfossil fuel, energy sources.

LME says its brands with LMEpassport disclosures that meet the premium sustainability thresholds will be eligible for trading on the sustainable metals segment of the Metalshub platform.

Metalshub has inaugurated its platform by hosting LME-grade low-carbon nickel trading. Since March 2024, more than 1,900 metric tons of low-carbon nickel have been offered through the platform, with nearly 500 metric tons traded.

In addition to nickel, the most commonly traded and warehoused metals in the LME system are aluminum, copper, lead, tin and zinc.

“I’m thrilled that we have made such quick progress that we are now able to announce the incorporation of CPAL in Dubai, a location that provides us with both the agility to respond quickly to market developments and the access to a rapidly developing international metals center,” says Georgina Hallett, LME chief sustainability officer and head of physical markets.