The international futures market will usher in a new variety.

It is reported that CME will launch lithium hydroxide futures on May 3, one of the important metal materials for battery production, and the launch of this variety will help related industries to manage risks. Earlier, CME also launched cobalt metal futures.

It is also worth noting that the commodity market, which has been silent for a period of time, has regained its upward momentum recently, copper prices are approaching their previous highs, there are also signs of a new rally in crude oil, and institutional enthusiasm for a commodity bull market has been revived. In this context, the futures market, as an important risk management tool, becomes more and more important.

CME will launch Lithium Futures on May 3

On April 16, 2021, CME Group announced that it would launch lithium hydroxide CIF CJK (Fastmarkets) futures on May 3, 2021, which is currently awaiting review by relevant regulators. Lithium futures is designed to help market participants manage the risks of their battery metals and is the latest tool launched by Cheese companies to help build a long-term curve of key materials in the green economy. The company also recently launched cobalt metal (Fastmarkets) futures.

According to the published contract information, the lithium futures code is LTH, the contract size is 1 ton / piece, financial delivery is adopted, and the last trading day is the last Thursday of the contract month. If it is not a working day, it will be advanced by one day.

Young-Jin Chang, managing director and global head of metals at the Institute, said demand for key battery metals such as lithium and cobalt continued to rise as economies invested in low-carbon alternatives in the transport sector. The new lithium futures will provide customers with another tool to manage the price risks associated with the manufacture of electric vehicles.

As a spot company representative, Kevin Smith, managing director of Traxys Energy Metals Department, said that as the adoption rate of electric vehicles increases and the demand for lithium continues to grow, it is expected that this new futures contract will improve price discovery and risk management capabilities for the market.

The International Energy Agency (IEA) estimates that global electric vehicle sales increased by 40 per cent in 2020 compared with 2.1 million in 2019. The overall demand for electric vehicles is expected to continue to grow, with many carmakers promising to launch new electric vehicle models over the next decade to help achieve the goal of carbon neutrality.

According to reports, lithium futures will be settled according to the results of the lithium hydroxide assessment released by Fastmarkets, which reflects the spot prices of costs, insurance premiums and freight charges in China, Japan and South Korea, where battery capacity is currently concentrated.

Raju Daswani, chief executive of Fastmarkets, said that as the demand for electric vehicles continues to grow, the metal market for battery raw materials is growing rapidly, creating new hedging demand for market participants. It is my pleasure to work with Zhi Merchants to build on the successful launch of cobalt futures to help create solutions for comprehensive risk management throughout the battery metal supply chain.

Copper prices and oil prices have soared again.

The launch of new futures varieties will bring new risk management tools to the market. What attracts people's attention is that recently, the international copper and crude oil prices have begun a new round of rise.

Since mid-April, international copper prices have returned to the $9500 / tonne mark, up more than 20 per cent year-to-date.

Matt Simpson, a senior analyst at Jiasheng Group, said a variety of forces helped prop up copper prices in 2020, some of which are still at work today. Copper prices are representative of global economic growth, so if copper prices rise, it may be because investors believe the global economy will strengthen.

Copper prices fell by more than 30 per cent between mid-January and mid-March 2020 as the global epidemic hit the market. However, when the Fed cut interest rates and implemented stimulus measures in March, US stocks fell to a low, rising 121 per cent by February 2021. During this period, we have seen a marked weakening of the dollar, while governments and central banks around the world have released a lot of fiscal and monetary stimulus. Copper prices continue to be supported as the credit cycle is in full swing, vaccinations are promoted and stimulus measures are still in place, and investors expect demand to rise as borders are opened and blockades lifted. "Matt Simpson said.

Goldman Sachs Group, an international investment bank, raised its forecast for copper prices in its latest report last week, predicting that copper prices will remain above $11000 from next year and rise to $15000 in four years' time. Goldman Sachs Group believes that because copper is indispensable for countries around the world to promote green energy transformation, the demand related to green energy innovation will surge in the future, and the current copper market is tight. If the current price level is maintained, by 2023, that is, at the beginning of the year, global copper stocks will be exhausted. Only a much higher price can stimulate the supply gap to be filled, and copper prices are bound to soar.

In addition to non-ferrous metals represented by copper, crude oil, the king of commodities, is also showing signs of rising again. Brent crude rose more than 4% a day on April 14, with the latest price at $66.12 a barrel.

In response to the recent rise in oil prices, Matt Simpson said that on April 14th the International Energy Agency (IEA) raised its oil demand forecast for 2021, citing a stronger global economic outlook. The American Petroleum Institute (API) also reported a reduction in crude oil inventories due to a rebound in demand, providing solid data support for IEA's positive forecasts. The recent weakness of the dollar has also played a role in breaking through the range of oil prices, with the dollar index falling back from 93 to below 92, which is related to the recent temporary peak and decline in US bond yields.

The oil price correction phase was completed in March, and the 14-day breakthrough in oil prices was marked by a return to the long-term bullish trend after oil prices were just waiting for a positive catalyst to push them higher. In fact, the only reason oil prices did not rise throughout March was that parts of Europe returned to the blockade, which dampened some demand.