LME launches liquidity window for cash-settled cobalt

The London Metal Exchange has launched a window of trading intended to drive liquidity in to the cobalt cash-settled contract, settled against Fastmarkets’ benchmark standard-grade cobalt price, it said.

The liquidity window is between 9-10am London time every Wednesday and will come in to effect for the first time on May 6, Fastmarkets understands.

“The LME understands that members and other market participants interested in trading the LME Cobalt (Fastmarkets MB) cash-settled contract would find it useful to have a regularly scheduled period during LMEselect’s standard operating hours during which they could focus their trading activity,” the LME said.

“The period has been identified to further support the coalescence of liquidity for this nascent contract,” the LME added.

The contract can still be traded outside of this period, however, with the liquidity window only serving to focus trading to the one-hour time frame to expedite the rate at which bids and offers are matched.

The LME launched its cash-settled contract for cobalt in March 2019 using Fastmarkets’ benchmark standard-grade cobalt price, as a response to volatility in cobalt spot market prices.

Spot cobalt prices have undergone significant swings in recent years, which coincided with multinational companies in the battery and automotive supply chains gaining exposure to the metal due to the electric vehicle (EV) boom.

The global slowdown following the nCov-19 coronavirus outbreak has triggered the latest period of volatility, where demand has fallen while consumers continue to take contract volumes but avoid the spot market, Fastmarkets understands.

Fastmarkets benchmark price for standard-grade cobalt, in-whs Rotterdam was $15.10-15. 50 per lb on May 5, flat day on day but down by 8.4% from $16.50-16.90 per lb at the beginning of February.

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