Aluminum Stocks Catch Breath but Face Burdensome Mid- to Long-Term Eco-Friendly Costs

EU Carbon Border Tax Implementation Postponed to 2026
Potential Expansion to Include Indirect Emissions in Future

[Asia Economy Reporter Gong Byung-sun] Aluminum-related stocks have faced issues with the carbon border tax originating from Europe but are breathing a sigh of relief thanks to looser-than-expected regulations. However, rising eco-friendly standards are expected to inevitably lead to increased costs.

According to the Korea Exchange on the 21st, since the 15th until the previous day, Sama Aluminum, Namseon Aluminum, and Joil Aluminum rose by 1.05%, 2.71%, and 22.58%, respectively. This contrasts with the steel and metal sector index of the KOSPI, which includes aluminum stocks, falling by 2.68% during the same period.

The 15th was a day when all metal industries, including aluminum, were closely watching the European Union (EU). On the 14th (local time), the EU Commission announced the policy package “Fit for 55,” which includes plans for large-scale carbon emission reductions and carbon border tax-related measures. The carbon border tax means additional taxation on EU-exporting companies based on the carbon emissions produced during manufacturing. Aluminum production emits 6.8 times more carbon dioxide than copper.

However, aluminum stocks rebounded as the carbon border tax included in “Fit for 55” was more relaxed than feared. It was initially expected to be fully implemented from 2023, covering both direct and indirect emissions, but in reality, it will be applied only to direct emissions starting in 2026. Jin Jong-hyun, a researcher at Samsung Securities, explained, “Seventy percent of the aluminum industry's total carbon emissions come from electricity use, which is classified as indirect emissions,” adding, “With a three-year grace period, the aluminum industry seems to be breathing a sigh of relief due to the lenient regulations.”

Nevertheless, the consensus in the securities industry is that the carbon issue cannot be avoided in the mid to long term. “Fit for 55” includes a clause stating that the carbon border tax could be expanded to cover indirect emissions in the future. This leaves room for raising eco-friendly standards going forward. Researcher Jin said, “Aluminum companies in Europe are passing on the costs corresponding to indirect emissions from power companies, which the EU can take into consideration,” adding, “If indirect emissions are included in the carbon border tax, aluminum companies’ cost burdens will inevitably increase.”