FEATURE: Malaysia's Press Metal drives sustainability push with launch of low-carbon aluminum brand GEM

Southeast Asia's largest integrated aluminum producer, Press Metal, has launched its new low-carbon aluminum product series branded as GEM, detailed in a presentation at the company's headquarters in Selangor, Malaysia, attended by S&P Global Commodity Insights.

Press Metal first previewed GEM at an aluminum exhibition in Dusseldorf, Germany in the week ended Oct. 11.

The GEM line of low-carbon aluminum products includes P1020 and primary foundry alloy (PFA) ingots, as well as billets and wire rods.

Press Metal's primary aluminum smelters in the Mukah and Samalaju regions of Sarawak, Malaysia have a total nameplate capacity of 1.08 million mt/year and predominantly operate on renewable hydropower, making them widely known for their low-carbon aluminum metal.

The low-carbon aluminum metal produced by Press Metal has less than 4 mt of CO2 emissions per metric ton of metal output for Scope 1 and 2 emissions, in line with Platts specifications for low-carbon aluminum premium assessments in Europe and the US.

"Through consistent refinement of our strategies, processes and practices, we are steadily improving our performance across the ESG [environmental, social and governance] spectrum, ensuring that we maintain the right balance between delivering shareholder returns and driving responsible growth," Group CEO Tan Sri Dato' Koon Poh Keong said in a message about Press Metal's approach to sustainability.

The company's latest launch reflects a further push to meet sustainability goals in the aluminum industry, with key features of GEM being carbon footprint traceability and supply chain transparency for its products.

"Through the launch of GEM, Press Metal hopes to create more awareness for low-carbon material demand. It also signifies our commitment to the environment and low-carbon product offerings," Chey Kang Howe, general manager at Press Metal, said.

A sample of Press Metal's low-carbon aluminum certificate provided to Commodity Insights featured cradle-to-gate carbon footprint certifications by third-party experts, including the Aluminium Stewardship Initiative (ASI), as well as conformity to ISO standards.

"Beyond greenhouse gas (GHG) emissions, we also focus on the environmental life cycle assessment (LCA) to comprehensively trace and certify our products' impact and usage by downstream sectors beyond the smelting stage," Chey said.

Inquiries pick up pace in Asia

Talks of Asian buyers seeking specific volumes of low-carbon aluminum for 2025 from the automotive and packaging sectors continue to pick up pace, although market participants' willingness to pay a premium varies based on feedback from conversations with sources across the region.

"There is regulatory support from CBAM [Carbon Border Adjustment Mechanism] in Europe for low-carbon material," Bryan Teoh, senior manager of sales and marketing at Press Metal, said. "Although such regulatory support has not been observed in Asia, the market has observed more inquiries and potential interest in Asia for low-carbon aluminum."

In the Asian seaborne markets, interest from Japan is leading the region, followed by Taiwan, Vietnam, Thailand and South Korea, albeit with mixed views on the additional premiums heard for low-carbon material.

"The spectrum of [low-carbon aluminum] prices remains very wide, as buyers specifically looking for certified metal may have to pay a wide range of premiums depending on the origin and product type due to limited supply, but those who do not need certifications can still get them at the regular prices," Teoh said.

Preliminary market feedback indicates that low-carbon premiums generally range from around $10/mt to high double digits for certified P1020A and value-added products (VAP) of aluminum, in addition to the base aluminum premiums referenced in Asia, namely the quarterly and spot CIF main Japanese ports (MJP) premiums and the CIF main Asian port (MAP) premium assessed by Platts.

Platts assessed the Q4 MJP premium for imported primary aluminum at $175/mt plus London Metal Exchange cash, CIF main Japanese ports, on Oct. 7, up 1.7% from $172/mt in the third quarter, making Q4 premiums the highest so far in 2024 amid tighter supply. The level also reflected an 80.4% increase from $97/mt in Q4 2023, according to Commodity Insights data.

Platts assessed the CIF MJP spot premium for 99.7% P1020/1020A aluminum ingot at $162/mt plus LME cash Oct. 28, up nearly 5% month on month as LME aluminum futures returned to a contango structure and amid higher indications following the QMJP negotiations.

Platts assessed the CIF MAP spot P1020 aluminum premium unchanged on the session at $157/mt plus LME cash Oct. 28. Activity in the South Korean CIF spot market remained muted due to slow performance in the building, construction and automotive sectors.

The Platts CIF MAP premium is assessed using Incheon, South Korea as the basis port and considers shipments to main ports in Asia, excluding Japan, for freight normalization purposes. Platts prioritizes material of duty-free origin for the CIF MAP premium, in line with prevailing market practice for imports into South Korea.

Demand in Asia continues to depend on the automotive sector, particularly in Japan, Vietnam and Thailand, where vehicle assembly plants are located.

Further investments in alumina

Interest in upstream alumina prices and investments is heating up in the raw material space for feedstock security amid a continued spike in alumina prices due to global supply disruptions.

Press Metal plans to establish a 1 million-1.2 million mt/year integrated alumina facility in Sanggau, West Kalimantan, Indonesia, with progress on the refinery's construction depending on the timeline for completing the share transfer with Indonesian entities; however, the construction timeframe is expected to be similar to other projects in the West Kalimantan region, such as the existing Well Harvest Winning refinery.

The Oct. 28 assessment of $712/mt FOB Australia marked a new high for the benchmark Platts Alumina Index since its inception in August 2010, surpassing the previous peak in April 2018, driven by Russian sanctions and embargoes on Alunorte's output and exports from Brazil.

The global alumina market may remain elevated in Q4 due to availability issues and disruptions in the upstream bauxite sector, which are likely to offset the limited restoration of reduced output and shipping problems over Q2-Q3, according to market participants.