LME progresses on its sustainable development program with the launch of new lithium and scrap futures contracts
- Six new cash-settled futures include lithium hydroxide, two regional steel scrap contracts, European HRC, aluminum scrap and a paid European aluminum premium contract.
- Lithium and scrap contracts are a key part of the LME’s sustainability agenda – providing pricing and access for products and services that support the circular economy and EV transition
- New cash-settled futures trade monthly for up to 15 months and are valued in USD
The London Metal Exchange (LME) is pleased to announce today the launch of six new cash-settled futures contracts – including lithium hydroxide, steel scrap and scrap metal contracts. aluminum – offering pricing and risk management solutions for metals that support the electric vehicle (EV) transition and circular economy.
Georgina Hallett, Chief Sustainability Officer of LME, commented: “We are truly delighted to deliver an important element of our sustainability strategy, which positions transparency and access as essential components in making metals the cornerstone of a sustainable future. Our lithium and scrap contracts are the product of a valuable engagement with the metals and mining industry, our members and key users, as we all seek to best support the growth of circular and low-emission economies. of carbon. “
LME Lithium Hydroxide CIF (Fastmarkets MB) is a battery futures contract designed to address the risk management need for battery and car manufacturers, and the growing interest of investors seeking exposure to the sector in rapid growth. Transferring risk through derivatives such as these will help physical market players manage their supply chain, facilitating long-term planning, financing and growth.
Ron Mitchell, International Business Group Sales Director of Tianqi Lithium Corporation and Chairman of the LME Lithium Committee, said: “The LME has worked with lithium market players around the world for over three years. to gain a thorough understanding of the commercial and technical nuances of an industry still in its early stages of maturation. The launch of the lithium hydroxide cash-settled futures contract is a milestone not only for LME but also for the global lithium industry. The contract offers industry an important price risk management tool and comes at a critical time to support future electrification goals for many countries. “
With its existing scrap steel contract (Platts TSI HMS 1/2 80:20 CFR Turkey), the two new regional contracts – LME Steel Scrap CFR Taiwan (Argus) and LME Steel Scrap CFR India (Platts) – provide a package tools to manage price risk for global flows of scrap steel products, positioning the LME at the center of the global scrap steel trade. These two contracts refer to the key regional prices that underpin the two main routes for container-shipped steel scrap, which may have very different dynamics than bulk transport markets like CFR Turkey.
A new European hot-rolled coil contract is also launched today – LME Steel HRC NW Europe (Argus) – in response to strong support from the flat steel market. Key players in major European industrial sectors, including automotive, renewable energy and construction, have expressed their desire for a product that removes the basis risk introduced by the increased regionalization of steel markets.
LME Aluminum UBC Scrap US (Argus) is the Exchange’s premier aluminum scrap contract and focuses on the large North American used beverage can (UBC) market, helping this industry manage its price risk and to facilitate the development of the wider recycled aluminum value chain. The second aluminum product of this launch is LME Aluminum Duty Paid European (Fastmarkets MB). This contract completes the LME offer for European aluminum premiums, making it possible to cover both the duty paid price and the unpaid duty price, which have different user bases and pricing dynamics.
All new cash-settled futures trade monthly for up to 15 months, and are valued and cleared in USD.
• The complete list of new cash-settled futures contracts is as follows: