Metal Bulletin launched a market consultation in May to migrate its existing price assessment for battery-grade lithium carbonate, ex-works China, to an index.
Despite the overwhelming majority of lithium supply being covered by long-term contracts, there has been an increasing amount of spot business concluded in recent years, particularly in China, where some smaller producers sell up to 50% of their production in the spot market.
The Chinese domestic lithium market is being closely monitored by market participants throughout the supply chain because the domestic market often leads global price movements and therefore serves as a proxy for the lithium market.
Metal Bulletin has been monitoring the Chinese domestic spot market and has identified this as the only lithium market where liquidity currently warrants the implementation of an index-based methodology.
The lithium carbonate index is a tonnage-weighted calculation, where actual transactions carry full weight as reflected by the reported volume, while offers, bids and market participants’ own assessments of the market are weighted at the specified minimum tonnage.
These measures will ensure the weekly lithium index is intrinsically tied to the physical market and confirmed spot transactions, even in times of low liquidity.
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.
Metal Bulletin is committed to providing robust & transparent pricing mechanisms for the lithium sector. As such, we have developed several indicators to demonstrate the depth of market participants we engage with to calculate the Chinese domestic ex-works battery-grade lithium carbonate index.
By enhancing Metal Bulletin’s Chinese lithium coverage, we greatly expanded the number of companies we engage with while pricing from all sides of the market. The pie chart below demonstrates the depth of Metal Bulletin’s lithium network, with pricing data points sourced from a variety of market participants across the lithium supply chain to ensure a balanced market view.
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:
Description: Battery-grade lithium carbonate, min 99.5% Li2O3, ex-works China
Basis: Ex-works, VAT included
Delivery Window: 30 days
Min lot size: 5 tonnes
Quality: Min 99.5% Li2CO3 (delivery of Min 99.2% Li2CO3 also accepted, qualified for use in battery applications)
Publication: Weekly, Thursday between 3pm and 4pm London
This price can also be converted to dollars using Metal Bulletin’s price book functionalities.
Metal Bulletin has been calculating this index from October 5, 2017, and the historical data will be available in price book.
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 Martim Facada/ Charlotte Radford by email at: firstname.lastname@example.org. Please add the subject heading FAO: Martim Facada/Charlotte Radford, re: lithium carbonate index.
To see all Metal Bulletin’s pricing methodology and specification documents go to www.metalbulletin.com/prices/pricing-methodology and download the Metal Bulletin Battery Grade Lithium Carbonate Index, ex-works China, methodology here.
Metal Bulletin will launch a weekly Chinese domestic ex-works battery-grade lithium carbonate index on Thursday August 2 to run in parallel to the existing price assessment, following a successful market consultation.