Tuesday, September 5, 2017

The LME Is Considering The Introduction Of A Lithium Contract

To date the only way to participate for non-industry punters has been through mining company equities, almost none of which offer pure-play exposure.
Should exposure be what one desires.

 Our preference was cobalt for which the LME does have a futures contract and whose underlying supply vs. lithium is a bit tighter. As usual though, once you think you've found the key they go and change the lock, in this case after the 150% move higher the battery producers are getting very creative with ways to reduce per-battery use of cobalt.

Innovation and substitution: the commodity speculators enemy.

From Mining Journal, August 31:

LME looks to lithium
The London Metal Exchange is looking into introducing a contract for lithium in what is another sign of the burgeoning demand for the lightweight metal.

While details were scarce on the ground, SP Angel expects that the contract would be tied to lithium carbonate concentrate, a major traded raw material for lithium processors and battery producers, and also possibly a contract for lithium hydroxide, a value added product preferred by some downstream consumers.

Both would likely have strict quality controls which might add to costs, SP Angel said.
When contacted by Mining Journal for comment on the possible contracts, a spokesperson for the LME said it had been approached by industry users regarding the introduction of an LME lithium contract and it was looking into this.

“We believe in developing products in conjunction with participants to meet the real needs of the market, and are committed to assessing and enhancing our offering as effectively as possible,” the spokesperson said.

Lithium prices have been on an uptrend recently thanks to increased demand for lithium-ion batteries.
European lithium carbonate/lithium hydroxide supplier Novo Lítio (AU:NLI), formerly Dakota Minerals, says demand forecasts for lithium carbonate equivalent (LCE) range from 550,000-600,000 tonnes per annum by 2025, up from 200,000tpa in 2016...MORE