CME Group has launched contracts tracking the price of spodumene, a key raw material for lithium batteries, heightening its competition with the London Metal Exchange (LME) in the global battery metals market.
On Monday, the U.S. exchange announced its plans to introduce futures contracts for spodumene, the lithium-rich rock mined for chemicals used in electric vehicle (EV) batteries. This development opens a new chapter in the battle among major commodities exchanges to establish themselves as the preferred platform for producers and miners trading battery metals, driven by the increasing demand for electric vehicles and related technologies.
Previously, available lithium futures—offered in London, Chicago, Guangzhou, and Singapore—focused on processed forms such as lithium hydroxide and lithium carbonate, vital components in EV batteries. Spodumene, primarily sourced from Australia, represents an upstream segment of the supply chain. Most lithium processing occurs in China, where prices for downstream chemicals like lithium hydroxide often correlate with spodumene prices.
"We are certain that battery metals will be essential minerals for the future, and demand will keep rising," said Jin Hennig, global head of metals at CME Group. The introduction of spodumene futures underscores how exchanges are attracting more clients by providing hedging tools for various stages of the lithium supply chain.
Lithium chemical prices have seen significant fluctuations over the past two years, spiking with rising EV demand and then declining due to an oversupply and slower growth in EV sales. Both CME and LME launched lithium hydroxide futures in 2021, followed by the Singapore Exchange’s futures in 2022. However, CME has outperformed LME in trading volumes for lithium hydroxide and cobalt contracts.
The new spodumene futures contract, set to launch on October 28 pending regulatory approval, will be cash-settled based on Fastmarkets’ assessment of spodumene delivered to China. This contract is expected to benefit Australian producers, who are the largest miners of spodumene ore.
Przemek Koralewski, head of market development at Fastmarkets, noted that CME is gaining market share in battery metals contracts. Trading volumes for CME’s lithium hydroxide contracts surged by over 700% in the first eight months of this year compared to the same period last year.
“The opportunity is immense, which is why multiple exchanges are competing for a share of this market,” Koralewski said, adding that as the lithium market expands, its structure could evolve to resemble that of oil, where derivatives trading significantly exceeds physical sales.
Industry experts draw parallels to the iron ore market, which shifted from annual fixed-price contracts to futures trading in 2010 as demand from China surged. While lithium hydroxide remains predominantly a physical market, with derivatives accounting for just 13%, Koralewski suggests a similar transformation could happen in the lithium sector.
