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Fastmarkets & CME Group launch cash-settled lithium contract

New lithium contract helps market participants mitigate risk as the growing electric vehicle sector increases the interest in lithium futures.

April 30, 2021 by Dalila Ouerghi

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The CME lithium futures contract is available to trade from May 3, 2021.

It is settled against Fastmarkets’ assessment for lithium hydroxide battery grade, spot price cif China, Japan & Korea. This contract was first announced by the exchange on Thursday, April 8, 2021.

Fastmarkets' lithium price, which is published weekly on Thursdays at 4 pm 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.

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 need to effectively manage price risk in this market continues to grow. Underpinned by the growth expectations in the electric vehicle (EV) sector. As interest increases so is the need for price transparency in the lithium market.

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

The CME Group has already partnered with Fastmarkets to launch a cash-settled cobalt contract.
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 has been steadily rising since February amid increased downstream buying and tightening supply.

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