Singapore – The Singapore Exchange (SGX) is set to launch its first lithium and cobalt contracts, adding to the commodity exchange’s efforts to attract battery materials companies and investors to futures trading. increase.
SGX plans to start trading On Monday two lithium and two cobalt contracts. The London Metal Exchange and his CME Group already offer futures on both metals, but trading liquidity is still well below established commodity contracts.
Demand for battery minerals is growing rapidly as the global automotive industry accelerates its transition to electric vehicles (EVs), causing significant price volatility. A global indicator of lithium prices has more than quadrupled over the past year, with Chinese lithium carbonate setting a new record last week.
Unprecedented price surges are calling for greater transparency in pricing, but analysts say the relative complexity of the market has led to a reliance on long-term supply deals that limit spot trading. The growing degree points to hurdles for the contract to gain traction.
S&P Global Commodity Insights analyst Leah Chen said: “Without physical delivery of cargo, it becomes a paper market and may risk falling into a space of speculation without providing security through hedging.”
SGX will start four contracts on Monday. battery grade lithium carbonate and lithium hydroxide, as well as cobalt metal and cobalt hydroxide. The open interest in the CME and LME lithium hydroxide contracts was zero as of September 22nd.
As raw material prices rise increase battery cost Automakers and battery makers are looking to secure future supplies of minerals amid fears of deepening shortages.This includes offtake deals and multi-year supply partnerships between upstream and downstream companies. will be
“For miners, this advantage over futures contracts is increasingly leading to direct equity investments in mining operations,” said Martin Jackson, senior analyst at CRU Group. “As long as the spot market remains a minority of the material traded, liquidity will limit the potential for futures trading.” Bloomberg
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