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CME seeks to drive demand for electric vehicles with lithium futures

Commodity exchange operator CME Group Inc. will launch a lithium futures contract with the aim of taking advantage of the growing demand for metals that help power electric vehicles.

According to CME, the deal is a lithium hydroxide contract that will be supplied to China, South Korea and Japan, where most of the world’s batteries are produced. If the futures contract is approved by the regulator, trading will begin on May 3.

By allowing lithium to trade freely on the exchange, we can shed light on the historically opaque price of metal, a key component of rechargeable batteries in smartphones, laptops and electric vehicles. Market participants currently rely on ratings from product data trackers such as Benchmark Mineral Intelligence, S & P Global Platts, and Fastmarkets.

Lithium’s role in powering secondary batteries has become a strategically important commodity as the government seeks to limit carbon emissions. The United States is competing to catch up with China in metal mining and refining to support the automotive industry and tackle climate change.

Demand for metals is expected to boom as the government seeks to pull the economy away from fossil fuels and automakers such as General Motors unveil suites of electric vehicles. However, the limited visibility of prices, primarily set in quarterly or annual contracts, put buyers at a disadvantage in negotiations with producers.

CME seeks to drive demand for electric vehicles with lithium futures

Source link CME seeks to drive demand for electric vehicles with lithium futures

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