With increased environmental conservation efforts and carbon footprint goals, nations worldwide are aiming to reduce carbon by 45% by 2030. Among the many plans that are enacted, electric vehicles and its battery-operated systems are effective as they produce zero emissions at the tail pipe, which means that they do not release pollutants or greenhouse gases into the air while driving.

Some studies by organisations such as the Union of Concerned Scientists and other non-profit organisations have shown that on average, electric vehicles produce fewer emission than gasoline-powered vehicles in their entire life cycle. (Even when accounting for the emissions associated with generating the electricity).

Given the strengths of the electric vehicles, the demand for battery metals, steel and other parts have been increasing in demand. Hence, this article will provide details regarding the battery metals industry and the futures market.    


What Metal is in a Car Battery

Nickel, Cobalt and Lithium are raw materials in a car battery.
 

Overview of the Energy Battery Industry

Based on the report by McKinsey, lithium and cobalt markets have historically been driven by battery demand – primarily from consumer electronics – representing 40 percent and 25 percent of demand respectively in 2017. Additionally, over 10 percent of cobalt supply occurs as a primary product, with a remainder produced as a by-product of primarily copper and nickel mines and over 65 percent of global production concentrated in the Democratic Republic of Congo (DRC).

While global EV adoption, factors such as increased government involvement, availability of infrastructure, OEM’s automotive platform choices and consumer preferences will determine the extent of growth in the industry. Overall, the firm estimates that the global EV production will increase from 3.2 million units in 2017 to 13~18 million units by 2025 ultimately reaching 26~36 million units in 2030.

Based on the Global EV market component report by marketsandmarkets, it is also estimated that the EV market is restricted due to insufficient charging infrastructure, currently, the top 3 countries with charging networks are the Netherlands, China, and UK. Others that are set to expand EV charging stations are countries such as Singapore, Germany, UAE, Japan, South Korea, Sweden, France, US and Russia.

 

Battery Metals Exchanges  

Singapore Exchange (SGX):

For both the cobalt and lithium components of the electric vehicle, SGX has emerged as a powerhouse. Launched on September 26, 2022, these contracts were created in a period where “lithium prices has more than quadrupled in the past year, while Chinese lithium carbonate just hit a fresh record last week” (week ending September 23,2022).

However, while the futures intended to serve the same purposes as LME’s nickel contract in increasing price transparency for the battery metals market, limitations about these contracts for the energy vehicles market were equally relevant. For traders, “without the physical delivery of cargoes, it will be a paper market and there may be the risk of falling into the space of speculation”.

FM Cobalt Metals IN-WHS Rotterdam (Standard Grade) COM/COMF
FM Cobalt Hydroxide CIF China Futures COH/COHF 
FM Lithium Carbonate CIF CJK (Battery Grade) LIC/LICF 
FM Lithium Hydroxide CIF CJK (Battery Grade) LIH/LIHF
 

London Metal Exchange (Hong Kong Exchange):

Nickel Futures

Based on a recent update by LME, with effect from 20 March 2023, the market will be returning to Asian Trading Hours. This means a return to a 01:00 London time start and is expected to further contribute to rebuilding in the LME Nickel Market.

The return to Asian trading hours is a start for the exchange in its journey to remove certain LME Nickel-specific interim measures, which were implemented during March 2022.

Lithium Hydroxide CIF (Fastmarkets MB)

Lithium Hydroxide CIF by the London Metal Exchange was launched with Fastmarkets in 2021. The product aimed to ease the struggle of pricing transparency as lithium was predominantly a producer and consumer good, which led to difficulties in ascertaining what the true price was.  


Shanghai Futures Exchange (SHFE):

Nickel Futures Contract

As an alternative of Nickel Futures Contract from LME, traders that have made the switch to SHFE’s contracts will have to do so through CSRC approved avenues, which means that “SHFE currently only permits registered Chinese entities to participate in its nickel trade…making it less likely that sellers will agree”. 

 

Demand for EV Metals

With EV metals futures from the three main exchanges, SGX, LME, SHFE, increasing attention is drawn towards the industry. Based on a report from the International Energy Agency (IEA) , higher battery demand had already resulted in the price of battery metals skyrocketing, with the price of lithium eight times higher than the start of 2021, said Paoli at the launch of the IEA’S Global Electric Vehicle Outlook 2022.

Subsequently, the discussion questioned if there will be enough global battery capacity to meet such demand. In its current trajectory, it is estimated that it would take roughly 10 times higher manufacturing volume to produce the number of batteries needed.

 

Start Trading With Orient Futures Singapore 

Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.

Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG). Starting August 2023, corporate clients can also gain access to the B3 Exchange through us.

We provide bespoke services to our professional clients, tailored to their corporate and individual needs. Our team will be there for you 24 hours on trading days to provide a one-stop portal for all your trades, with simple processes and an intuitive user interface that has low or near-to-zero latency.