Regulators approve GFEX lithium carbonate derivatives
On July 7, the China Securities Regulatory Commission approved lithium carbonate futures and options to trade on the Guangzhou Futures Exchange (GFEX).
- Single-day price changes will reportedly be limited to 4%.
That’s good news for battery-makers, who will finally have exchange-based financial products to help navigate whipsawing lithium markets. Lithium carbonate prices jumped 92% between April and June – after falling 70% between November and April.
Some context: The GFEX launched trading on December 22 as China’s fifth futures exchange – and its first with mixed state and private ownership. It’s now a hub for industrial-grade silicon trading, key to the solar industry.
The GFEX plans to offer derivatives for rare earths, platinum, and other key energy transition materials, over the coming years. That’s not to mention long-term plans for trading derivatives of emissions allowances issued by the national emissions trading scheme (ETS).
The GFEX’s development is critical to China’s low-carbon transition – and many of the key industries driving it. Lithium derivatives, specifically, will help Chinese battery-makers and automakers hedge against global material costs, while also providing clearer regional price signals.
We suspect Beijing wants the GFEX to improve China’s influence over global minerals markets. But with lithium already traded in Chicago, London, and Singapore, the latest offerings won’t much change the global market – it’ll just make life easier for Chinese producers.