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As the global energy transition accelerates, demand for lithium, cobalt, nickel and other battery raw materials has reached unprecedented heights. Meeting this demand means grappling with price volatility and complex, evolving supply chains. At the centre of this fast-changing market landscape are robust, trusted price benchmarks – a crucial foundation for effective risk management and sustainable growth.
Fastmarkets’ price assessments serve as the benchmark underpinning derivatives contracts on leading commodity exchanges, including the CME Group, London Metal Exchange and SGX. This integration aligns physical and financial markets, empowering producers, consumers and investors with greater market transparency and more efficient risk management tools.
Industry-leading exchanges have adopted Fastmarkets price benchmarks to settle futures contracts for battery raw materials. This endorsement highlights not just the reliability of Fastmarkets’ methodologies, but also the growing emphasis on transparent, standardised pricing mechanisms for the energy transition.
Recognized benchmarks like these enable greater confidence in trading, giving participants the tools they need to hedge exposure, manage price risk and plan for the future – keys to thriving in fast-growing and unpredictable markets.
A fundamental concept in derivative trading is the “convergence principle”: at contract expiration, a futures price should converge with the spot price. Reliable price benchmarks are therefore essential. They ensure that physical contracts can be hedged effectively and that futures markets operate with integrity.
The credibility of Fastmarkets assessments has supported growth and liquidity in associated futures markets. When trusted benchmarks reflect true market conditions, trading activity rises, further improving clarity and pricing for all participants.
Battery raw materials require specialised handling and transportation, making physical delivery on exchange impractical for many. Cash-settled futures solve this problem by settling contracts using Fastmarkets price benchmarks – no physical product changes hands, just the financial difference.
This approach, proven effective in mature commodity markets like iron ore, broadens market access. It allows a wide range of participants – from banks and funds to smaller producers and end users – to actively manage price risk without logistical barriers.
The energy transition brings tremendous investment needs and significant uncertainty. Rapid uptake of renewables, shifting policy landscapes, and evolving trade patterns all contribute to pronounced price swings, especially in volatile markets like lithium.
Businesses often operate with floating price contracts where final prices aren’t fixed until delivery. This exposes them to market fluctuations between contract signing and completion. Derivatives allow companies to take offsetting futures positions, locking in costs or revenues and protecting against adverse price movements – a vital tool for maintaining healthy margins.
Building out battery material supply chains demands billions in capital and multi-year commitments. Lenders and investors seek certainty about revenue streams, often requiring companies to hedge commodity price exposure before financing projects.
Liquid, trusted futures markets – anchored by robust benchmarks – give companies the ability to strip out price risk, satisfy lender requirements, and unlock more competitive financing. This accelerates supply chain expansion and ultimately supports the energy transition’s long-term goals.
Battery raw materials markets are evolving rapidly, moving from opaque, relationship-based trading toward standardised, data-driven approaches. Transparency, reliable price information and robust risk management aren’t just best practices – they’re quickly becoming standard.
A few key factors fuel this maturation:
With established price benchmarks, strong industry partnerships, and proven settlement mechanisms, the battery raw materials market is poised for continued development. As more participants adopt risk management tools and derivatives, the market will become more resilient – a critical step toward powering the global clean energy future.
By providing the infrastructure for risk transfer and transparent pricing, Fastmarkets continues to empower market participants, helping them stay agile, competitive and ready to seize emerging opportunities in the rapid energy transition.
To find out more about how Fastmarkets works with global exchanges to help market participants secure rates and reduce exposure to price volatility, click here.