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Lithium carbonate futures listing approaching "white oil" price system restructuring?
2023/6/25
Another step closer to the listing of lithium carbonate futures.
Recently, the Guangzhou Futures Exchange (hereinafter referred to as "GFE") announced that it is steadily pushing forward the research and development of lithium carbonate futures and options, and has researched and developed the relevant contracts and rules, and has publicly solicited comments on them.
Industry researcher Zhang Xiaowen said in an interview: "The recent launch of lithium carbonate futures, options simulation trading and the public consultation, are in preparation for the listing of lithium carbonate futures, but the official listing may not be so fast. Because a futures variety from the public consultation to physical delivery, settlement rules to determine, there are many specific work to do. And the market is currently in the midst of volatility, so the timing of the lithium carbonate futures listing is difficult to determine."
"The former lithium price has been decided by the Australian mining enterprises, the domestic hope that through the launch of lithium carbonate futures to gain pricing power, but also this is related to the security of the domestic new energy industry." Wang Li, who works as a lithium carbonate researcher in a domestic head futures company, told reporters that "the ups and downs of lithium prices in recent years have affected the healthy development of the industry, which also needs a financial tool to smooth out price fluctuations."
Match domestic industry demand
On June 14, the official public number of the broad period released "on lithium carbonate futures and lithium carbonate options contracts and related rules for public comment announcement.
The announcement shows that the lithium futures contract listed by the wide range of futures, to use physical delivery, the unit is 1 ton (net weight); benchmark delivery products for battery-grade lithium carbonate, alternative delivery products for industrial-grade lithium carbonate, alternative delivery products discount 25,000 yuan / ton; trading unit for 1 ton / lot, the minimum change price of 50 yuan / ton; minimum trading guarantee for 5% of the contract value; up and down range of 4%; can The trading contract is from January to December.
Zhang Xiaowen said the launch of a futures product requires two potential conditions: first, the market is large enough, the second is the market demand for futures and options tools. "In the past two years, the lithium battery industry has grown up, driving demand for hundreds of thousands of tons of lithium carbonate each year. At the same time, after the roller coaster market, everyone is afraid, especially the downstream industry, which needs to use options to level out costs and lock in profits, so there is a basis and motivation for futures and options trading."
In fact, with the gradual expansion of the global lithium salt market size, three overseas exchanges have previously launched lithium futures contracts.
Guotai Junan Futures research report shows that the Chicago Mercantile Exchange (CME) launched the world's first lithium hydroxide futures contract on May 3, 2021, settling the underlying battery-grade lithium hydroxide monohydrate (LiOH-H2O, minimum content 56.5%) CIF prices in Japan and South Korea released by FastMarkets. In July of the same year, the London Metal Exchange (LME) also listed a lithium hydroxide futures contract, with the same settlement basis as the CME.
Later in September 2022, the Singapore Exchange (SGX) launched price index futures contracts for both lithium hydroxide and lithium carbonate, with the settlement underlying for lithium hydroxide following the CME and LME options. In addition, unlike the physical delivery on the GFE, the lithium futures contracts on the above three overseas exchanges all use cash-settled delivery methods.
"Previously, CME, LME and SGX have launched lithium futures varieties with cash settlement, but probably due to the fact that the relevant industry chain is still in the country, these contracts are more like a capital game without really serving the real industry, and therefore are not effective." Wang Li said that overseas lithium hydroxide futures as the mainstream, and the broad period of preparation for the launch of lithium carbonate futures, mainly because the domestic production of lithium iron phosphate batteries, the greater demand for lithium carbonate raw materials. In addition, lithium carbonate is easier to preserve than lithium hydroxide is also one of the reasons.
Zhang Xiaowen said that the wide range of futures planned to launch is lithium carbonate physical delivery futures, mainly designed to match the domestic industrial demand. Domestic production is mainly lithium carbonate, its as a large amount, capacity of the basic products, there are delivery conditions and demand.
At the same time, from the quality requirements of the benchmark futures deliverables announced by the Canton Futures Institute this time, battery-grade lithium carbonate has tightened the magnetic substance content based on the 2013 non-ferrous metal industry standard, added new indicator constraints such as burn-off, boron and fluorine, and relaxed the requirements for potassium, calcium and chlorine content.
"The 2013 standard is somewhat old, and the current standard is more suitable for the current battery production." Wang Li said that this time is based on the 2013 industry standard slightly fine-tuned, some indicators appear to relax, some indicators are tightened.
Listing "may not be so fast"
Established in April 2021, the GFE is the fifth futures exchange in the country and the youngest.
"Several existing domestic futures exchanges have their own focus, such as China Gold is financial, the Shanghai Futures Exchange is metals and energy, the Zheng Institute of Commerce, Commodity Exchange is agricultural products, etc.. And wide futures are for carbon neutral goals, such as the new on silicon and this lithium carbonate and other varieties are related to the new energy industry." Wang Li told reporters.
Information on the official website of the Canton Futures Institute shows that its two-year variety plan was approved by the Securities and Futures Commission in May 2015, and will gradually carry out the research and development of 16 futures varieties listed. These include, carbon emission rights, electricity and other basic areas of the national economy and energy price reform strategy varieties, CSI commodity index, energy chemicals, feed farming, steel mill profits and other commodity index varieties, coffee, sorghum, indica and other regional characteristics of the Guangdong-Hong Kong-Macao Bay Area and the "Belt and Road" characteristics of varieties, as well as industrial silicon, polysilicon, lithium, rare earths, polysilicon, lithium, rare earths, platinum, palladium and other specialties closely related to low-carbon development.
Following the launch of the first futures variety of industrial silicon in December 2022, the Institute released the news in January 2023 that it is steadily promoting the research and development of lithium carbonate futures varieties in order to promote the stable and healthy development of the lithium carbonate industry.
In late April 2023, Cao Zihai, deputy general manager of the Institute, said that the Institute will continue to make efforts in the "new energy metals" sector, and strive to list lithium carbonate and polysilicon futures within the year. Shortly after the June 6 and 7, the wide futures institute that launched the lithium carbonate futures, options simulation trading.
"The official listing may not be so fast. A futures variety from public consultation to physical delivery, settlement and other rules to determine, in between there are many specific work to do." Zhang Xiaowen said the recent launch of lithium carbonate futures, options simulation trading and this public consultation, are in preparation for the listing of lithium carbonate futures, options, but the market is currently in the midst of volatility, so the specific time point for the listing of lithium carbonate futures is difficult to determine.
Manage the risk of price volatility
Lithium is known as "white oil". before 2015, lithium resources downstream demand mainly from the glass, ceramics, grease and other fields, prices tend to stabilize at a low level, only during the financial crisis and off-season fluctuations.
Since 2015, driven by strong demand at the power and energy storage ends, lithium prices as a whole have continued to move upward, and in recent years have staged a sharp rise and fall beyond expectations. Whether upstream lithium ore, lithium salt enterprises, or downstream battery materials, lithium batteries and vehicle enterprises, performance fluctuations, and even affect the normal production and operation.
The above-mentioned Guotai Junan futures research report said that the listing of lithium carbonate futures by the Canton Futures Institute will help form an authoritative lithium salt price in China, which can openly and timely reflect the changes in supply and demand in China's lithium salt spot market, thus helping the lithium salt industry to effectively manage raw material risks.
"In the absence of the launch of lithium carbonate futures contracts, lithium prices are the result of a small number of people gaming, upstream enterprises to control raw materials can prompt a rapid rise in lithium prices. After that, lithium prices will be determined by more participants, which will make it easier for lithium prices to converge to a recognized price pivot, avoid deviating from normal prices for too long and prevent one party from holding profits." Wang Li said in his analysis.
Wang Li said the launch of lithium carbonate futures also provides hedging tools for industry chain enterprises, such as upstream enterprises with inventory, can do hedging of selling; cathode material enterprises want to buy in the future, can do hedging of buying; intermediate trading enterprises, can combine futures and spot to do hedging.
The wide range of futures institutes said that raw material risk is the source of industry chain risk, and all aspects of the lithium salt industry chain are exposed to price fluctuation risk. Lithium carbonate futures, on the one hand, can provide price signals, production and procurement for enterprises to provide a basis for decision-making, on the other hand, can be used as a risk management tool for enterprise hedging, to achieve the refined management of price fluctuations risk.
Zhang Xiaowen said that the future launch of lithium carbonate futures will push the whole industry one step forward in a more mature direction, bringing more order to all parts of the industry chain. For example, it will make the cathode materials and other enterprises that rely on processing fees more orderly production and operation.
Zhang Xiaowen further said, the entire automotive industry has a strong plan, in this mechanism, the production of various parts of the industry chain are reflected in the characteristics. And lithium carbonate as the industry's main upstream raw materials, the launch of its futures and options instruments can well match this planned procurement model.
"As for which companies can benefit from the new trading mechanism in the future, it is uncertain. Trying to make profits purely through trading mechanisms mostly requires strategic and speculative trading, which is often difficult to sustain.
Recently, the Guangzhou Futures Exchange (hereinafter referred to as "GFE") announced that it is steadily pushing forward the research and development of lithium carbonate futures and options, and has researched and developed the relevant contracts and rules, and has publicly solicited comments on them.
Industry researcher Zhang Xiaowen said in an interview: "The recent launch of lithium carbonate futures, options simulation trading and the public consultation, are in preparation for the listing of lithium carbonate futures, but the official listing may not be so fast. Because a futures variety from the public consultation to physical delivery, settlement rules to determine, there are many specific work to do. And the market is currently in the midst of volatility, so the timing of the lithium carbonate futures listing is difficult to determine."
"The former lithium price has been decided by the Australian mining enterprises, the domestic hope that through the launch of lithium carbonate futures to gain pricing power, but also this is related to the security of the domestic new energy industry." Wang Li, who works as a lithium carbonate researcher in a domestic head futures company, told reporters that "the ups and downs of lithium prices in recent years have affected the healthy development of the industry, which also needs a financial tool to smooth out price fluctuations."
Match domestic industry demand
On June 14, the official public number of the broad period released "on lithium carbonate futures and lithium carbonate options contracts and related rules for public comment announcement.
The announcement shows that the lithium futures contract listed by the wide range of futures, to use physical delivery, the unit is 1 ton (net weight); benchmark delivery products for battery-grade lithium carbonate, alternative delivery products for industrial-grade lithium carbonate, alternative delivery products discount 25,000 yuan / ton; trading unit for 1 ton / lot, the minimum change price of 50 yuan / ton; minimum trading guarantee for 5% of the contract value; up and down range of 4%; can The trading contract is from January to December.
Zhang Xiaowen said the launch of a futures product requires two potential conditions: first, the market is large enough, the second is the market demand for futures and options tools. "In the past two years, the lithium battery industry has grown up, driving demand for hundreds of thousands of tons of lithium carbonate each year. At the same time, after the roller coaster market, everyone is afraid, especially the downstream industry, which needs to use options to level out costs and lock in profits, so there is a basis and motivation for futures and options trading."
In fact, with the gradual expansion of the global lithium salt market size, three overseas exchanges have previously launched lithium futures contracts.
Guotai Junan Futures research report shows that the Chicago Mercantile Exchange (CME) launched the world's first lithium hydroxide futures contract on May 3, 2021, settling the underlying battery-grade lithium hydroxide monohydrate (LiOH-H2O, minimum content 56.5%) CIF prices in Japan and South Korea released by FastMarkets. In July of the same year, the London Metal Exchange (LME) also listed a lithium hydroxide futures contract, with the same settlement basis as the CME.
Later in September 2022, the Singapore Exchange (SGX) launched price index futures contracts for both lithium hydroxide and lithium carbonate, with the settlement underlying for lithium hydroxide following the CME and LME options. In addition, unlike the physical delivery on the GFE, the lithium futures contracts on the above three overseas exchanges all use cash-settled delivery methods.
"Previously, CME, LME and SGX have launched lithium futures varieties with cash settlement, but probably due to the fact that the relevant industry chain is still in the country, these contracts are more like a capital game without really serving the real industry, and therefore are not effective." Wang Li said that overseas lithium hydroxide futures as the mainstream, and the broad period of preparation for the launch of lithium carbonate futures, mainly because the domestic production of lithium iron phosphate batteries, the greater demand for lithium carbonate raw materials. In addition, lithium carbonate is easier to preserve than lithium hydroxide is also one of the reasons.
Zhang Xiaowen said that the wide range of futures planned to launch is lithium carbonate physical delivery futures, mainly designed to match the domestic industrial demand. Domestic production is mainly lithium carbonate, its as a large amount, capacity of the basic products, there are delivery conditions and demand.
At the same time, from the quality requirements of the benchmark futures deliverables announced by the Canton Futures Institute this time, battery-grade lithium carbonate has tightened the magnetic substance content based on the 2013 non-ferrous metal industry standard, added new indicator constraints such as burn-off, boron and fluorine, and relaxed the requirements for potassium, calcium and chlorine content.
"The 2013 standard is somewhat old, and the current standard is more suitable for the current battery production." Wang Li said that this time is based on the 2013 industry standard slightly fine-tuned, some indicators appear to relax, some indicators are tightened.
Listing "may not be so fast"
Established in April 2021, the GFE is the fifth futures exchange in the country and the youngest.
"Several existing domestic futures exchanges have their own focus, such as China Gold is financial, the Shanghai Futures Exchange is metals and energy, the Zheng Institute of Commerce, Commodity Exchange is agricultural products, etc.. And wide futures are for carbon neutral goals, such as the new on silicon and this lithium carbonate and other varieties are related to the new energy industry." Wang Li told reporters.
Information on the official website of the Canton Futures Institute shows that its two-year variety plan was approved by the Securities and Futures Commission in May 2015, and will gradually carry out the research and development of 16 futures varieties listed. These include, carbon emission rights, electricity and other basic areas of the national economy and energy price reform strategy varieties, CSI commodity index, energy chemicals, feed farming, steel mill profits and other commodity index varieties, coffee, sorghum, indica and other regional characteristics of the Guangdong-Hong Kong-Macao Bay Area and the "Belt and Road" characteristics of varieties, as well as industrial silicon, polysilicon, lithium, rare earths, polysilicon, lithium, rare earths, platinum, palladium and other specialties closely related to low-carbon development.
Following the launch of the first futures variety of industrial silicon in December 2022, the Institute released the news in January 2023 that it is steadily promoting the research and development of lithium carbonate futures varieties in order to promote the stable and healthy development of the lithium carbonate industry.
In late April 2023, Cao Zihai, deputy general manager of the Institute, said that the Institute will continue to make efforts in the "new energy metals" sector, and strive to list lithium carbonate and polysilicon futures within the year. Shortly after the June 6 and 7, the wide futures institute that launched the lithium carbonate futures, options simulation trading.
"The official listing may not be so fast. A futures variety from public consultation to physical delivery, settlement and other rules to determine, in between there are many specific work to do." Zhang Xiaowen said the recent launch of lithium carbonate futures, options simulation trading and this public consultation, are in preparation for the listing of lithium carbonate futures, options, but the market is currently in the midst of volatility, so the specific time point for the listing of lithium carbonate futures is difficult to determine.
Manage the risk of price volatility
Lithium is known as "white oil". before 2015, lithium resources downstream demand mainly from the glass, ceramics, grease and other fields, prices tend to stabilize at a low level, only during the financial crisis and off-season fluctuations.
Since 2015, driven by strong demand at the power and energy storage ends, lithium prices as a whole have continued to move upward, and in recent years have staged a sharp rise and fall beyond expectations. Whether upstream lithium ore, lithium salt enterprises, or downstream battery materials, lithium batteries and vehicle enterprises, performance fluctuations, and even affect the normal production and operation.
The above-mentioned Guotai Junan futures research report said that the listing of lithium carbonate futures by the Canton Futures Institute will help form an authoritative lithium salt price in China, which can openly and timely reflect the changes in supply and demand in China's lithium salt spot market, thus helping the lithium salt industry to effectively manage raw material risks.
"In the absence of the launch of lithium carbonate futures contracts, lithium prices are the result of a small number of people gaming, upstream enterprises to control raw materials can prompt a rapid rise in lithium prices. After that, lithium prices will be determined by more participants, which will make it easier for lithium prices to converge to a recognized price pivot, avoid deviating from normal prices for too long and prevent one party from holding profits." Wang Li said in his analysis.
Wang Li said the launch of lithium carbonate futures also provides hedging tools for industry chain enterprises, such as upstream enterprises with inventory, can do hedging of selling; cathode material enterprises want to buy in the future, can do hedging of buying; intermediate trading enterprises, can combine futures and spot to do hedging.
The wide range of futures institutes said that raw material risk is the source of industry chain risk, and all aspects of the lithium salt industry chain are exposed to price fluctuation risk. Lithium carbonate futures, on the one hand, can provide price signals, production and procurement for enterprises to provide a basis for decision-making, on the other hand, can be used as a risk management tool for enterprise hedging, to achieve the refined management of price fluctuations risk.
Zhang Xiaowen said that the future launch of lithium carbonate futures will push the whole industry one step forward in a more mature direction, bringing more order to all parts of the industry chain. For example, it will make the cathode materials and other enterprises that rely on processing fees more orderly production and operation.
Zhang Xiaowen further said, the entire automotive industry has a strong plan, in this mechanism, the production of various parts of the industry chain are reflected in the characteristics. And lithium carbonate as the industry's main upstream raw materials, the launch of its futures and options instruments can well match this planned procurement model.
"As for which companies can benefit from the new trading mechanism in the future, it is uncertain. Trying to make profits purely through trading mechanisms mostly requires strategic and speculative trading, which is often difficult to sustain.
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