Over the past 18 months the London Metal Exchange (LME) has been working closely with the global lithium industry to meet the need for transparent and robust reference prices. Following extensive market engagement, the LME is announcing today that it is partnering with price reporting agency Fastmarkets to promote market uptake of a transparent and representative global lithium price. Continued adoption of reference pricing across the industry will pave the way for launch of a LME lithium futures contract.

Robin Martin, LME Head of Market Development said “In recent years there has been unprecedented price volatility in the lithium market, driven particularly by explosive electric vehicle (EV) battery demand. The LME has been approached by a number of industry players, including producers, end users and several leading automotive firms, to develop effective lithium price-risk management tools. We are delighted to be announcing the next step in that process today.”

In 2018 the LME requested proposals from several leading price reporting agencies with the objective of selecting the lithium market’s preferred price provider. The selection process included presentations delivered to the LME’s EV Metals Advisory Group, comprising key players from across the value chain, and was followed by extensive market discussion. The LME, on the basis of market views, selected Fastmarkets as its pricing partner due to their lithium prices being widely used across the industry combined with their leading pricing capabilities. Due to its chemical nature, lithium is not suitable for a physically-delivered contract, and hence the LME, together with its Advisory Group, believe that partnership with a price reporting agency represents the best route to a tradeable contract.

The LME is uniquely positioned to develop pricing solutions for the lithium market and will spend the coming months jointly promoting the industry’s transition towards reference pricing. In support of this, the Fastmarkets lithium prices will be made available free of charge through the LME’s website. The LME will continue to work with its Advisory Group and other industry participants to gauge appropriate timing for launch of a lithium contract.

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