The "white oil" futures are coming! The China Securities Regulatory Commission agrees to register the price of lithium carbonate futures and options on the Guangzhou Futures Exchange, which includes the price, trading, options, Guangzhou Futures, and lithium carbonate

On July 7th, according to the website of Guangzhou Futures Exchange, the China Securities Regulatory Commission recently agreed to register lithium carbonate futures and options on the Guangzhou Futures Exchange, requiring Guangzhou Futures Exchange to make all necessary preparations to ensure the smooth launch and stable operation of lithium carbonate futures and options.

It is understood that lithium carbonate is an important lithium salt product in the lithium industry, with widespread downstream applications. As a core raw material in the lithium battery industry, lithium carbonate is mainly used in fields such as new energy vehicles and energy storage; Meanwhile, in the industrial field, lithium carbonate can be used as an additive for ceramics, glass, electrolytic aluminum, refrigerant, optical communication, rare earth electrolysis, etc; In addition, lithium carbonate is also used in other fields such as medicine.

At present, in the downstream application of lithium carbonate, lithium battery cathode materials occupy the dominant position. Among them, new energy vehicle power batteries account for 60% of the downstream consumption of lithium carbonate, so lithium carbonate is also known as "white petroleum".

China is the world's largest producer and consumer of lithium carbonate, with production and apparent consumption reaching 379000 tons and 505000 tons respectively in 2022, accounting for 63% and 81% of the world's total. Based on an average price of 482400 yuan/ton in 2022, the scale of China's lithium carbonate consumption market is approximately 243.6 billion yuan. With the listing of lithium carbonate futures and options, Guangzhou Futures Exchange will contribute futures strength to the development of the new energy vehicle industry and energy storage field.

Guangzhou Futures Exchange stated that it will steadily advance the preparation work for the listing of lithium carbonate futures and options in accordance with the requirements of the China Securities Regulatory Commission, ensuring the smooth listing and stable operation of lithium carbonate futures and options. After the listing of lithium carbonate futures and options, the new energy metal futures category will initially form, playing a positive role in the healthy development of China's new energy industry and continuously improving international competitiveness.

On the same day, the Guangzhou Futures Exchange also issued a notice on soliciting market makers for lithium carbonate options, a notice on soliciting designated delivery warehouses for lithium carbonate futures, and a notice on soliciting designated quality inspection institutions for lithium carbonate futures.

In the Notice on Soliciting Market Makers for Lithium Carbonate Options, Guangzhou Futures Exchange stated that in order to ensure a stable start and high-quality development of the lithium carbonate options market, it is now soliciting market makers for lithium carbonate options. To apply for the qualification of a market maker for lithium carbonate options, one must meet the following conditions:

Net assets shall not be less than RMB 50 million or its equivalent in foreign currency; Having specialized institutions and personnel responsible for market making, market makers should be familiar with relevant laws, regulations, and exchange business rules; Having a sound market making implementation plan, internal control system, and risk management system; There have been no major violations of laws or regulations in the past three years; Having a stable and reliable market making technology system; Having experience in trading, market making, or simulated trading recognized by the broad market; Other conditions stipulated by the China Securities Regulatory Commission and the Guangzhou Futures Exchange.

In the notice on soliciting designated delivery warehouses for lithium carbonate futures, Guangzhou Futures Exchange stated that in order to prepare for the listing of lithium carbonate futures, it is now publicly soliciting designated delivery warehouses for lithium carbonate futures. The designated delivery warehouses for lithium carbonate futures include delivery warehouses and delivery factory warehouses, and the solicitation scope includes spot enterprise legal persons in the regions of Jiangxi Province, Sichuan Province, Qinghai Province, Hunan Province, Hubei Province, Jiangsu Province, Fujian Province, Guangdong Province, and Shanghai.

In addition, to enhance the understanding of futures practitioners about lithium carbonate futures, Guangzhou Futures Exchange collaborated with Guangdong Securities and Futures Industry Association, Shenzhen Futures Industry Association, Shanghai Futures Industry Association, Beijing Futures Chamber of Commerce, and Sichuan Securities and Futures Industry Association to carry out special training on lithium carbonate futures and options listing from July 6th to 14th.

Prevent the sharp rise and fall of lithium carbonate prices

On June 14th, the Guangzhou Futures Exchange announced that it is steadily advancing the research and development of lithium carbonate futures and options, and has studied and formulated the "Guangzhou Futures Exchange Lithium Carbonate Futures Contract", "Guangzhou Futures Exchange Lithium Carbonate Options Contract", and "Guangzhou Futures Exchange Lithium Carbonate Futures and Options Business Rules".

Among them, the draft for soliciting opinions on lithium carbonate futures contracts states that the minimum fluctuation price for lithium carbonate futures trading is 50 yuan/ton, and the limit up and down range is ± 4% of the settlement price on the previous trading day. The limit up and down range for delivery months is 6% of the settlement price on the previous trading day; The minimum trading margin is 5% of the contract value. In terms of trading details, the maximum number of orders placed per transaction for lithium carbonate futures contracts is 1000, and the minimum number of orders placed per transaction is 1.

It is worth noting that the relevant contracts of Guangzhou Futures Exchange specify that the trading unit for lithium carbonate futures contracts is 1 ton per hand. Some industry insiders have stated that trading regulations based on tons will to some extent restrict the entry of retail speculators and raise the funding entry threshold for lithium carbonate futures.

It can be seen that the price of lithium carbonate has fluctuated greatly in the past two years, which has to some extent damaged the stable and healthy development of the industry.

At the beginning of 2021, the market price of lithium carbonate was approximately 50000 to 60000 yuan per ton. In the second half of 2021, the price of lithium carbonate has been rising all the way, and it once exceeded 600000 yuan per ton in 2022, an increase of more than 10 times. Entering 2023, the price of lithium carbonate plummeted sharply. In mid April, the price of battery grade lithium carbonate dropped to about 180000 yuan/ton, and then began to rise. Currently, the price range of lithium carbonate is about 300000 to 320000 yuan/ton.

In the eyes of some industry insiders, futures and options trading play an irreplaceable role in stabilizing the prices of bulk commodity trading. Both buyers and sellers can hedge and lock in the trading prices of key raw materials through futures and options trading, effectively avoiding the impact of price fluctuations. At the same time, buyers can also establish virtual inventory through the futures market, which can avoid the impact of raw material price fluctuations and alleviate the financial pressure of early purchase of raw materials.

The futures and options trading system is an open and transparent quotation system, which can change the current opaque state of lithium carbonate quotations and help establish reasonable price expectations for the upstream and downstream of the battery industry.

In addition, the lithium carbonate futures of Guangzhou Futures Exchange are clearly based on physical lithium carbonate as the delivery object. It is understood that there have been announcements from lithium carbonate producers such as Jiangte Electric, Yongxing Materials, Shengxin Lithium Energy, and Ganfeng Lithium Industry, applying to become Guangzhou Futures Exchange's lithium carbonate futures delivery warehouse.