Commodities alternate operator CME Group Inc. plans to launch a futures contract for lithium, in search of to capitalize on rising demand for a steel that helps to energy electrical automobiles.
The contract will likely be for lithium hydroxide delivered to China, South Korea and Japan, the place most batteries globally are produced, CME mentioned Thursday. If the futures contract is permitted by regulators, it’ll start buying and selling on Could 3.
Permitting lithium to commerce freely on an alternate might assist shed extra mild on traditionally opaque costs for the steel, a key ingredient in rechargeable batteries for smartphones, laptops and electrical automobiles. Market contributors at the moment depend on assessments from commodities-data trackers similar to Benchmark Mineral Intelligence, S&P International Platts and Fastmarkets.
Lithium’s function in powering rechargeable batteries has made it a strategically vital commodity as governments search to restrict carbon emissions. The U.S. is racing to meet up with China in mining and refining the steel to help its auto trade and sort out local weather change.
Demand for the steel is anticipated to increase amid efforts by governments to wean economies off fossil fuels, in addition to strikes by automotive makers together with Common Motors Co. to unveil suites of electrical automobiles. However restricted visibility over costs, that are principally set in quarterly or annual contracts, have put patrons at a drawback in negotiations with producers.