BATTERY MATERIALS BLOG: Introducing Fastmarkets’ battery pricing portfolio

The battery has increasingly provided mobility across a wide range of products in the 200 years and more since Alessandro Volta invented the world’s first battery in 1800.

The march of science led to the development of the first rechargeable lithium-ion battery prototype in Japan in 1985.

And today there is a sharp focus on batteries – the rechargeable energy source is revolutionizing the automobile industry through the growth in production and use of the electric vehicle (EV). The immense potential size and scale of this market will boost demand for batteries (see chart) and its ingredients exponentially over the next 10-20 years.

These market dynamics for battery raw materials, such as lithium, will cause great uncertainty and volatility in prices. This will drive the need for use of an independent price benchmark to be used by buyers and sellers in the market to enter into long-term supply contracts and manage price risk and volatility through a futures market that will develop over time.

Price reporting agencies (PRAs) such as Fastmarkets specialize in developing such prices. Over the last 100-plus years, we have worked closely with markets to develop pricing that most closely reflects the commodities they trade.Today we have a global team of more than 400 people, including 50 employees in China.

Our expert teams assess prices with the aid of a state-of-the-art data collection software and system and a process that stands up to an annual independent external audit. Our process is IOSCO-compliant, enabling us can provide assurance to the market that we comply with the highest standards expected from global PRAs.This is how we have developed a suite of pricing benchmarks for the key battery-making commodities including lithium, graphite, cobalt and nickel products.

During my 12 years as CEO of Fastmarkets, we have made significant investment in the battery raw materials space to drive transparency in this market. Our aim is to support the trade of the products across the battery supply chain – from mine to market. Our commodity prices are well established and are widely used as benchmarks for physical and futures contracts. Global automakers already use Fastmarkets’ lithium and cobalt prices in contracts with miners and suppliers.

To enable the market to manage risk and hedge their sales or purchases, the London Metal Exchange is running a process that will consider the shape and form that such a futures market could take. Fastmarkets is part of that process; our suite of lithium prices is being considered as a reference for a contract that could be launched by the exchange later this year.

On 17 January 2019, the LME announced that it had selected Fastmarkets MB for its new cash-settled cobalt contract, which will be launched in March this year.

Subsequent posts from my colleagues will be made on this blog to inform the market accordingly. We will also be attending Battery Materials 2019, which takes place over April 10-12 in Shanghai. There, we will run a workshop on price risk management as well as presenting on the pricing trends in 2018 and forecasts for 2019-2020 for lithium, cobalt, nickel and graphite.

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