Fastmarkets-LME partnership will pave way for lithium futures contract, says exchange

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 seven new cash-settled futures products on March 11 – it selected Fastmarkets to be the price provider for its aluminium duty-unpaid, alumina and cobalt contracts.

Fastmarkets has identified the ex-works China market as the most liquid spot market for battery-grade lithium at present.

Fastmarkets’ latest assessment of the price for the benchmark Chinese domestic spot battery-grade lithium carbonate, min 99.5% Li2CO3 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.

Learn more about Fastmarkets’ lithium pricing methodology here and read the latest lithium price spotlight here.