CME taking battery metals main stream launching lithium futures

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(Kitco News) – The battery metals market continues to heat up as investors focus on the growing green energy revolution. One exchange is looking to bring the market into the mainstream with a new futures contract.

The CME Group announced Thursday that it is launching Lithium Hydroxide CIF CJK (Fastmarkets) futures on May 3, pending all relevant regulatory reviews.

“Lithium futures are designed to help market participants manage their battery metals risk, and they represent the latest tool the exchange has launched to help establish a forward curve for a key material in the green economy,” the CME said in a press release.

The CME said that the contracts would be financially settled based on the Lithium Hydroxide assessment published by Fastmarkets, which reflects the cost, insurance and freight (CIF) spot price in China, Japan and South Korea, where the majority of battery manufacturing capacity is concentrated today.

The new lithium market comes as the International Energy Agency estimates that 2.1 million electric vehicles were sold last year, up 40% from 2019 sales. The CME noted that demand for electric vehicles is expected to continue to grow, with many car manufacturing companies pledging to introduce new electric vehicle models over the next decade to help meet carbon-neutral targets.

“Demand for key battery metals like Lithium and Cobalt continues to accelerate as economies invest in lower carbon alternatives for the transportation sector,” Young-Jin Chang, Managing Director and Global Head of Metals at CME Group, said in a statement. “CME Group is the destination for managing global metals risk, and the new Lithium futures will provide our customers with another tool for managing the price risks associated with the manufacturing of electric vehicles.”

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