Fastmarkets, CME Group to launch cash-settled lithium contract

Fastmarkets has partnered with the CME Group to launch a cash-settled lithium futures contract that will be settled against Fastmarkets’ assessment for lithium hydroxide battery grade, spot price cif China, Japan & Korea, the exchange announced on Thursday April 8.

The contract is due to be launched on May 3, subject to all relevant regulatory reviews, it said.

Fastmarkets’ lithium price, which is published weekly on Thursdays at 4pm London time, achieved its Type 2 International Organization of Securities Commissions accreditation last year.

The lithium futures will be listed by and subject to the rules of Comex, a CME division.

The futures contract is designed to provide price transparency and access to a metal that is pivotal to the transition to electric vehicles (EV). Lithium is a key component of EV batteries.

Interest around bringing price transparency to the lithium market has been underpinned by bright growth expectations in the EV sector. The adoption of EVs has continued to grow globally despite the economic fallout from the Covid-19 pandemic.

Lithium futures will help market participants to mitigate their risk and increase exposure to this key battery raw material, while the global shift to a greener economy gathers pace.

The CME Group has already partnered with Fastmarkets to launch a cash-settled cobalt contract.

“Demand for key battery metals like lithium and cobalt continues to accelerate as economies invest in lower carbon alternatives for the transportation sector,” Young-Jin Chang, managing director and global head of metals at the CME Group, said.

“The new lithium futures [contract] will provide our customers with another tool for managing the price risk associated with the manufacturing of electric vehicles,” he added.

Raju Daswani, Fastmarkets’ chief executive officer, said: “The battery raw materials metals market is rapidly evolving as electric vehicle demand continues to grow, creating new hedging needs for market participants.”

Fastmarkets’ assessment for lithium hydroxide monohydrate 56.5% LiOH.H2O min, battery grade, spot price cif China, Japan & Korea was $11.50-12.50 per kg on April 8, up 2.13% week on week.

The assessment has been steadily rising since February amid increased downstream buying and tightening supply.

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