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A total of 29 lots have traded at the time of publication on Monday, according to CME data.
The CME Group announced the spodumene futures contract, which is settled against Fastmarkets’ spodumene, min 6% Li2O, spot price, cif China assessment, on September 30.
”We are pleased FIS continue to be the pioneer and first broker in the battery metal derivative space – as these markets develop contracts like spodumene will enhance the growth in risk management tools,” John Banaszkiewicz, founder of Freight Investor Services (FIS), said.
“It’s great news to see active participants from day one, and this seems to be only the start. We believe this new contract will provide new opportunities to market participants to handle their price risk exposure over the whole lithium complex (lithium hydroxide, lithium carbonate, spodumene),” Robin Tisserand, head of battery metal at SCB, said.
This new spodumene futures contract adds to an existing group of cash-settled futures contracts launched by CME Group for lithium, including lithium hydroxide and lithium carbonate, which are also settled against Fastmarkets’ spot prices.
Fastmarkets’ daily assessment of spodumene, min 6% Li2O, spot price, cif China was at $730-760 on Friday October 25, unchanged from a day earlier, but was down by 21.58% from $900-1,000 per tonne on January 3.
Anticipation for the launch of the new futures contract had been growing within the market, with participants generally expressing interest in the new risk management tool.
“It’s definitely an interesting development,” one consumer told Fastmarkets. “It allows us to explore new potential avenues in our approach to lithium.”
“Anything which supports the broader development and maturity of the spodumene market is a positive in our eyes,” a trader said, adding that the emergence of a transparent forward curve for spodumene will be a significant step in the price development of the market.
There have been some reservations regarding the latest launch, with participants noting the complexity of spodumene concentrate as a product, due to variations in grades and impurities.
One broker told Fastmarkets that due to the relative newness of the contract, it would take time for some participants to begin trading it.
“A lot of the reaction we’ve seen towards the contract has been from the physical side of the market, I think the financial side is still evaluating how to approach it,” the broker said.
Fastmarkets amended the minimum accepted lithium content in the specifications for the spot spodumene assessment in September, reducing the minimum lithium oxide grade content to 5.0% from 5.7%, if it can be normalized to be priced on a 6% basis.
The market feedback showed that even though spodumene is still typically priced at the 6% benchmark, the actual grades for spodumene have broadened significantly in recent years, with spodumene regularly produced and traded below 5.7% grade.
Despite some initial caution though, the significant role of spodumene in the production of lithium chemicals means that attention on the market has grown significantly in recent years.
Spodumene prices have shown great volatility in history, with the prices rising to an all-time high of $8,000-8,575 per tonne between November 24 to December 8, 2022, according to Fastmarkets’ historical data, following a global electric vehicle market boom.
Spodumene prices remained under general downward pressure following weakness in the downstream lithium salts market over the past year, especially because spodumene prices are increasingly linked to lithium salts prices.
This relationship between the two products has been heavily scrutinized in recent times, largely due to a fundamental shift in the percentage value of spodumene against battery grade lithium hydroxide.
Historically, spodumene had typically represented around 4% of the price of lithium hydroxide.
But during the 2021 price cycle in lithium, prices for battery grade lithium hydroxide increased more than 300% in a year, before eventually peaking in December 2022, with a more than 800% increase over the course of two years. During the peak, and since that time, the percentage value has stood at 7-10% typically.
As a result, a greater commitment to price transparency has grown in the market, with producers now offering auction events as a method of providing additional price transparency.
Fastmarkets uses these auction prices in its price assessments across the lithium suite, normalizing to our specifications where necessary.
Want to know more? Read Fastmarkets’ spodumene FAQs here.