Lithium
Lithium is used in the manufacture of aircraft and in certain batteries. The diverse range of uses for the material has made it one of the most demanded in the industry.
In recent years, lithium is used to make lithium-ion batteries for electric cars and mobile devices. The increase in demand has also led to an increased interest in the price of lithium and its associated products such as lithium-ion batteries, lithium carbonate, and lithium hydroxide.
Apart from the uses of lithium, this post will cover key information about the related futures contracts offered by the Singapore Exchange (SGX):
Battery Metal Futures From SGX
The recent release of the four main battery metal products from SGX is in partnership with Fastmarkets (refer to this article on energy metals for more information). William Chin, Head of commodities at SGX said,”2022 will see a crystallization of ESG initiatives with the global economy embarking on a strong sustainability drive.. With the launch of the energy metals derivative contracts, we will be providing our clients with unique capital efficiencies…allowing market participants to undertake price risk management of key raw materials”.
This strategic move by both parties, SGX and Fastmarket, has drawn the attention of many traders and investors. Moreover, given that “SGX has a successful track record in the development of cash-settled derivatives in recent years”, the exchange is well positioned to support the battery metals industry while strengthening the global decarbonization movement.
What are EV Metals?
Apart from its name as energy metal, lithium is also called an EV Metal. EV (Electric Vehicle) metals are primarily constituted of two earth metals, gold, and silver. However, the solution for the near future is in lithium-ion batteries due to their potential as a battery material and as a renewable energy.
Most notably, based on Tesla’s 2020 impact report, it is noted that an important distinction between fossil fuels and lithium-ion batteries as an energy source is that while fossil fuels are extracted and used once, the materials in a lithium-ion battery are recyclable. In addition, the company sends 1,300 tons of nickel, 400 tons of copper, and 80 tons of cobalt for recycling every year.
Hence, EV metals are deserving of attention from both traders and supply-side miners as operations from companies such as Tesla, lithium companies and large lithium producers begin to scale up in the subsequent quarters.
What Are The Benefits of Trading With SGX
Some of the benefits of trading with SGX include reduced counterparty risk through daily mark-to-market positions, holistic trading opportunities for products of virtual car complex, up to 21.5 hours of clearing, and safe trading with a trusted and recognized clearing house.
Furthermore, SGX operates at with a standard trading procedure, orders, and timing, which will enable traders to trade efficiently.
Alternatively, more information about the benefits of trading with SGX, or the type of services offered by the exchange can also be found here, or on the official SGX website.
SGX FM Lithium Carbonate CIF CJK (Battery Grade) Futures
Lithium Carbonate is used to enhance the production and application of batteries, in general, lithium carbonate and lithium hydroxide are two forms of lithium compounds that are used for battery cathode production.
Demand and Supply-side factors affect the price of lithium, lithium price per ton hit an all-time high of $77,000 per tonne.
The SGX Lithium Carbonate Futures contract follows the following specifications:
The contract size for Lithium Carbonate is 1,000kg multiplied by the Contract price, with a minimum price fluctuation of one-hundredth of a United States dollar, equivalent to ten United States dollars per Contract.
Trading Hours are from Monday to Friday, at these trading hours:
Trading Day
7:10am - 8:00pm (T-session)
8.00.01pm - 5.15am (T+1 Session)
7:10 am – 8:00 pm (Last Trading Day)
SGX FM Lithium Hydroxide Futures CIF CJK (Battery Grade) Futures
Lithium Hydroxide is also an EV metal, it is another alternative to creating car batteries, with its lower rate of decomposition at a lower temperature, it allows the production of battery cathodes to be more sustainable and long-lasting.
However, based on reports by Innovationnewsnetwork, Lithium Hydroxide “is in much shorter supply than lithium carbonate at present”.
The SGX Lithium Hydroxide Swaps/Futures contract follows the following specifications:
The contact size for Lithium Hydroxide Futures is 1,000kg multiplied by the Contract price, with a minimum price fluctuation of one-hundredth of a United States dollar, equivalent to ten United States dollars per Contract.
Trading Hours are from Monday to Friday, at these trading hours:
Trading Day
7:10am - 8:00pm (T-session)
8.00.01pm - 5.15am (T+1 Session)
7:10 am – 8:00 pm (Last Trading Day)
At final settlement, all open positions in the contract at the termination of trading must make payment or receive payment in accordance with normal variation margin procedures based on a settlement price equal to the settlement price.
Market News
On one hand, Lithium Carbonate price was recorded to hit a record-high 510,500 yuan/tonne in September, soaring over 80% year-to-date as surging demand coincides with lower supply. On the other hand, based on DRM, battery grade Lithium Hydroxide prices are in the range of US$8,375/t to US$8,700/t.
Currently, Chile, Australia, and China are home to most of the lithium mines and reserves, and most reports anticipate that the lithium supply is set to triple by 2025. This may narrow the gap between the demand and supply differences in the market.
Nonetheless, both demand and supply remain speculative as other sources such as Bacanora Lithium anticipate that lithium stocks are expected to be exhausted and persistent undersupply to be entrenched for the next few years. Therefore, traders will have to exercise due diligence when assessing the product.
Where To Trade Lithium Carbonate or Lithium Hydroxide Futures?
Trading lithium carbonate and lithium hydroxide from SGX is important for many reasons that affect both supply-side sellers and buy-side traders. Some reasons include managing price volatilities, budgeting the costs of raw materials, inventory planning, and pricing transparency.
To start trading in EV metal, clients can open an account with Orient Futures Singapore. Thereafter, as a clearing member of SGX, clients will have direct access to the market to trade the above mentioned futures contracts.
To find out more, contact us here.
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).
We provide premium customer service at an affordable cost to all our clients. 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.
