Fastmarkets, the price reporting agency whose assessments underpin the London Metal Exchange’s (LME) physical aluminium trade, has proposed incorporating the cost of the European Union’s Carbon Border Adjustment Mechanism (CBAM) directly into the aluminium P1020A benchmark premiums for Italy and Spain. The move, set for implementation from January 1, 2026, could redefine how carbon costs are priced across Europe’s aluminium supply chain. The consultation paper, released in early October 2025, details that CBAM costs would be integrated into the existing aluminium P1020A premium assessments — MB-AL-0316 (Italy) and MB-AL-0319 (Spain) — reflecting logistics, warehousing, regional demand-supply balances, and prevailing duty costs.
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The consultation period runs until October 31, 2025, after which Fastmarkets will finalise whether CBAM costs are to be embedded within or tracked separately from regional premiums.
From transitional reporting to cost integration
CBAM entered its transitional phase on October 1, 2023, requiring importers to report embedded carbon emissions in goods such as aluminium, iron, steel, cement, and electricity without financial penalties. Under the final phase, beginning January 2026, importers will start purchasing CBAM certificates, effectively paying for the difference between the EU carbon price and that of the exporting country.
The EU Emissions Trading System (ETS), serving as the basis for CBAM pricing, has seen its carbon allowance price fluctuate between EUR 60 and EUR 90 per tonne of CO₂ in 2025. The European Commission projects CBAM-related carbon costs for aluminium imports could reach EUR 200 per tonne by 2035, depending on carbon intensity and power mix at origin.
Fastmarkets’ proposal recognises that aluminium imported from high-carbon-intensity regions such as China, the Middle East, or parts of Southeast Asia could face CBAM costs between EUR 50 and EUR 90 per tonne in the near term. In contrast, material sourced from low-carbon regions, particularly producers using hydropower or renewables (e.g., Norway or Canada), could face marginal CBAM exposure.
Specification overhaul for Italy and Spain
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