LME Also Launches Lithium Futures Market... Intensifying Competition with CME

[Photo by Reuters]

[Asia Economy Reporter Park Byung-hee] The London Metal Exchange (LME) intensified its competition with the Chicago Mercantile Exchange (CME) Group by launching lithium futures trading on the 19th (local time). The CME Group had opened the lithium futures market two months earlier, in May.

Lithium is one of the most spotlighted raw materials due to the surge in electric vehicle demand. In China, the world's largest electric vehicle market, the price of lithium hydroxide used in lithium-ion batteries has risen by 86% this year alone.

Consulting firm Benchmark Mineral Intelligence forecasted that lithium demand will increase sevenfold by 2030, driven by the growth in electric vehicle sales.

The European Union (EU) unveiled the 'Fit For 55' blueprint on the 14th, aiming to achieve carbon neutrality by 2050. Under Fit For 55, the EU plans to ban the sale of gasoline and diesel cars starting in 2035. The automotive industry is expected to accelerate investments to prepare for the electric vehicle era. Demonstrating this, Mercedes-Benz announced on the 22nd that it will invest 40 billion euros to produce only electric vehicles from 2030 onward.

With the activation of lithium futures trading, automakers can hedge against the sharp price volatility of lithium. This enables more stable procurement of raw materials, facilitating more aggressive investments.

The LME stated that it will connect investors with the automotive and battery industries through the futures market. It aims to provide new investment opportunities for investors and help the battery and automotive sectors avoid risks associated with price volatility.

The LME prepared to launch the lithium futures market over the past three years through extensive exchanges with the lithium industry. The LME's lithium committee includes the world's largest lithium producer Albemarle and U.S. electric vehicle manufacturer Tesla Motors.

The LME and CME are also fiercely competing in the cobalt market, another raw material gaining attention due to electric vehicle demand. The International Energy Agency (IEA) expects cobalt demand to increase more than 20 times by 2040.

This content was produced with the assistance of AI translation services.