Data collected by Metal Bulletin shows that there is sufficient liquidity in China’s domestic market to warrant the conversion of the existing assessed price to a tonnage-weighted index.
The Chinese lithium market is also closely watched by lithium producers and the battery sector more broadly as a proxy for and precursor to trends in the global market.
As such, Metal Bulletin has developed a pricing mechanism to better capture the week-to-week price moves in the lithium market. The index is structurally tied to confirmed spot market transactions; designed to balance the influence of all sides of the market; prevent market distortions; and provide a representative view of the domestic Chinese lithium spot market.
During times of low liquidity, non-transaction data is included in the index calculation, weighted at the minimum tonnage. Confirmed trades are given their full weighting in the final calculations.
Furthermore, in the absence of any trades on a given day, Metal Bulletin will roll over the last confirmed transaction for inclusion in that day’s index calculation.
The above measures will ensure that the weekly lithium index is intrinsically tied to the physical market and confirmed spot transactions, even in times of low liquidity.
It is intended that the new index will run in parallel with the existing assessment until at least January 2019. Metal Bulletin intends to review the continued utility of the assessment and its publication, in consultation with the lithium market, and will notify the market of its decision in October 2018.
Metal Bulletin remains well positioned, through its extensive coverage of the lithium market, to develop further indices to reflect the seaborne market, but liquidity is currently insufficient to justify this type of pricing mechanism outside the Chinese market.
The specifications for the proposed battery-grade lithium carbonate index, ex-works China, are in line with those for the existing price assessment and are as follows:
Price: Battery-grade lithium carbonate, min 99.5% Li2O3, ex-works China
Basis: Ex-works, VAT included
Min lot size: 5 tonnes
Quality: Min 99.5% Li2CO3 (delivery of Min 99.2% Li2CO3 also accepted, qualified for use in battery applications)
Delivery window: within 30 days
Publication: Weekly, Thursday by 4pm London time
This price will also be converted to US dollars as per the exchange rate on the day of publication.
The consultation period for this proposed launch will end 30 days from the date of this pricing notice, on Tuesday July 3. It is intended that the index will be published from Thursday July 5.
Metal Bulletin’s index methodology screens outliers and applies a quantity weighted model to ensure that its indices are the most robust in the industry. Such an approach has been successfully applied in a number of markets, including iron ore, alumina, copper treatment and refining charges (TC/RCs) and manganese ore.
Metal Bulletin has no financial interest in the level or direction of the index.
To provide feedback on this proposal or if you would like to provide price information by becoming a data submitter to this price, please contact Charlotte Radford/Martim Facada by email at: email@example.com. Please add the subject heading FAO: Charlotte Radford/Martim Facada, re: lithium carbonate index.
To see all Metal Bulletin’s pricing methodology and specification documents go to www.metalbulletin.com/prices/pricing-methodology
Metal Bulletin proposes to migrate its existing price assessment for battery-grade lithium carbonate, ex-works China, to an index.