World’s largest commodities exchange to launch lithium futures

Fastmarkets’ price reflects the spot price of cost, insurance and freight (CIF) in China, Japan and South Korea, where the majority of battery manufacturing capacity is concentrated today.

Allowing lithium to be traded freely on an exchange should make lithium pricing more transparent. Until now, market players have relied on ratings from data trackers on commodities such as Benchmark Mineral Intelligence, S&P Global Platts, and Fastmarkets itself.

“The demand for key metals for batteries 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 CME Group, said in a press release.

“The CME Group is the destination for global metals risk management, and the new lithium futures will provide our clients with another tool to manage the price risks associated with manufacturing electric vehicles.”

The choice of lithium hydroxide indicates that CME is betting on a shift from automakers to longer range batteries that exploit the compound. Lithium carbonate, on the other hand, is used in cheaper batteries.

The new lithium market comes as the International Energy Agency recently reported that 2.1 million electric vehicles were sold last year, up 40% from 2019 sales. Demand for electric vehicles is expected to continue to grow, with many automakers including General Motors, Mercedes Benz and Ford. committing to introduce new electric models over the next decade to help achieve carbon neutrality goals.


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