Fastmarkets-LME partnership will pave way for lithium futures contract, says exchange
Published: Monday, 10 June 2019
EV-inspired price volatility in lithium creates a need for risk management tools, the London Metal Exchange said
The London Metal Exchange is partnering with Fastmarkets to
promote the uptake of a transparent and representative global
lithium price, the exchange said on Monday June 10.
The partnership will pave the way for the LME to launch a
lithium futures contract.
"In recent years there has been unprecedented price volatility
in the lithium market, driven particularly by explosive
electric vehicle (EV) battery demand," LME head of market
development Robin Martin said in a press release.
"The LME has been approached by a number of industry players,
including producers, end users and several leading automotive
firms, to develop effective lithium price-risk management
tools. We are delighted to be announcing the next step in that
process today," he added.
The exchange has been working closely with the global lithium
industry over the past 18 months to meet the need for
transparent and robust reference prices, it said.
In 2018, the LME requested proposals from several leading price
reporting agencies (PRAs) - including Fastmarkets - with the
objective of selecting the lithium market’s
preferred price provider.
"The LME, on the basis of market views, selected Fastmarkets as
its pricing partner due to their lithium prices being widely
used across the industry combined with their leading pricing
capabilities," the LME press release said.
"Due to its chemical nature, lithium is not suitable for a
physically delivered contract, and hence the LME, together with
its advisory group, believe that partnership with a price
reporting agency represents the best route to a tradeable
contract," it added.
The LME will continue to work with its advisory group and other
industry participants to gauge appropriate timing for launch of
a lithium contract.
This comes after the LME launched launch seven new cash-settled
futures products on March 11 - it selected Fastmarkets to be
the price provider for its aluminium duty-unpaid, alumina and
Fastmarkets has identified the ex-works China market as the
most liquid spot market for battery-grade lithium at
Fastmarkets’ latest assessment of the price for
Chinese domestic spot battery-grade lithium carbonate, min
99.5% Li2CO3 on June 6 was 72,000-77,000 yuan ($10,395-11,117)
per tonne ex-works on June 6. This was down from 74,000-78,000
yuan per tonne the previous week.