China's Wuxi exchange plans to launch lithium contract as soon as July - sources

Steel Exchange India

07/06/2021 13:05

* Lithium carbonate contract could start trading in July -
sources
    * EV boom lifts prices for battery ingredient almost 70%
this year
    * London Metal Exchange to roll out lithium futures next
month

    By Tom Daly and Zandi Shabalala
    June 7 (Reuters) - China's Wuxi Stainless Steel Exchange
plans to launch a lithium contract as soon as July in response
to strong market demand to trade the metal used in electric
vehicle batteries, according to two sources with knowledge of
the matter and a draft document.
    The yuan-denominated contract will be for battery-grade
lithium carbonate, the draft announcement reviewed by Reuters
showed. 
    The document did not give a date for the launch, but one of
the sources said trading - which can be done on a spot or
forward basis - would start around July, while the second said
it would be in July or "August at the latest". 
    Both sources declined to be named as the information was not
public. The Wuxi bourse had no immediate comment on Monday.
    A launch any time in 2021 would likely make this the first
exchange-traded lithium contract in China, the world's biggest
electric vehicle market, allowing lithium producers and
consumers to manage price exposure.
    In the United States, CME Group Inc  CME.O  launched a
futures contract for lithium hydroxide - a chemical favoured in
nickel-rich batteries - last month, while the London Metal
Exchange plans to roll out its own hydroxide futures on July 19.
 urn:newsml:reuters.com:*:nL1N2MF239 urn:newsml:reuters.com:*:nFWN2M10CA    
    Located in Jiangsu province around 120 km (75 miles) west of
Shanghai, the Wuxi exchange already trades nickel and cobalt,
and serves as a reference point for domestic transactions. 
    It is pursuing the lithium contract after requests from
"numerous traders", taking into account the "production and
trading needs" of relevant enterprises, the draft said.
    Lithium carbonate prices in China have shot up more than 67%
in 2021 on resurgent demand after a three-year downturn, and are
currently assessed by Asian Metal  AM-995C-LTCB  at 88,000 yuan
($13,764) per tonne. 
    According to the document, prices on the Wuxi contract will
be quoted in yuan per kg, with the trading limit - or how much
prices can fluctuate either way during a day's trade - initially
set at 10%.
    ($1 = 6.3937 Chinese yuan renminbi)

 (Reporting by Tom Daly and Zandi Shabalala; Additional
reporting by Min Zhang; Editing by Jan Harvey)
 ((tom.daly@thomsonreuters.com; +86 10 5669 2119;))