Jin Henik CME Group Executive Director: "The Key Topic in the Derivatives Market is Battery Metals"

Growth in Battery Metals Including Not Only Copper and Aluminum but Also Cobalt Draws Attention
Market for Battery Metal-Related Exchange-Traded Funds (ETFs) Expected to Expand Further

Jin Henik, Executive Director and Head of the Global Metal Products Division, is answering questions during an interview with Asia Economy on the 17th.

"Battery metals are a relatively new area in the derivatives market, but they are attracting interest from various institutions. We plan to engage in discussions with diverse stakeholders to further develop this sector, which is the main purpose of my visit to Korea."

These were the words of Jin Henik, Managing Director and Head of Global Metals Products at CME Group, whom we met on the 17th at the Shilla Hotel in Jangchung-dong, Seoul. CME Group, which operates the world's largest derivatives exchange, owns as subsidiaries the four major U.S. derivatives exchanges: Chicago Board of Trade (CBOT), Chicago Mercantile Exchange (CME), New York Mercantile Exchange (NYMEX), and Commodity Exchange (COMEX).

Henik recently identified "battery metals" as a key topic in the derivatives market. He said, "In the industrial asset class, besides copper and aluminum, the growth of battery metals such as cobalt is noteworthy. We have been continuously monitoring and increasing our understanding of the battery metals sector for the past seven years." He added, "For a market to form, there must be demand from those seeking to hedge risks and those willing to take on risks to increase returns. It was only at the end of 2020 that we were able to launch cobalt contracts."

Accordingly, the market for exchange-traded funds (ETFs) related to battery metals is expected to expand further. Henik said, "ETFs are products more commonly seen in developed markets, and recently, ETFs related to electric vehicles have been launched in the U.S. This is a field more familiar to individual investors who follow companies like Tesla. Among our partners, some have launched aluminum ETFs that serve as battery components."

He stated, "There are many companies in Korea that could be excellent partners for the U.S., and Korea and the U.S. have a free trade agreement (FTA), making them very good partners for cooperation." He added, "To access and invest in the Korean market, one must go through securities firms. Although they are not direct customers, it is also important to deepen understanding of battery manufacturers."

He emphasized, "Especially since COVID-19, individual investors' interest in Korea has grown, making it one of the largest markets in Asia. We are working to strengthen promotion and education for investors in cooperation with Korean securities firms that handle overseas products, and have launched many small-scale products to lower entry barriers."

Henik also highlighted the recycling sector of battery metals as an emerging product category. He said, "Currently, half of the industrial steel in the U.S. is produced from scrap metal rather than iron ore," emphasizing the growth potential of the recycling sector. He added, "One of the biggest drivers is ESG (Environmental, Social, and Governance). Since the enactment of the U.S. Inflation Reduction Act (IRA), there has been significant interest in recyclable battery metals. This law allocates a budget of $400 billion for energy transition in the U.S." He continued, "In Europe, regulations are tightening, such as verifying the proportion of recyclable materials in automotive parts to sell cars. From an ESG perspective, metal demand is expected to increase in the long term."

He explained, "The primary purpose of trading in the metals sector is hedging." Using CME Group's cobalt contract as an example, he said, "Raw material management is essential even when selling a single car," because fixing raw material prices makes cost management easier. Conversely, "some institutional investors, such as those managing long-term pension funds, need to efficiently bear risks to improve returns. CME Group acts as a bridge to connect these parties in the market and provides liquidity."

Jin Henik, Executive Director and Head of the Global Metal Products Division, is answering questions during an interview with Asia Economy on the 17th.

Regarding the outlook for the metals market, he said, "We need to watch the upcoming U.S. presidential election next year, interest rate fluctuations, and changes in the dollar's value. The prolonged war has also become an uncertain factor due to geopolitical risks." He added, "In such situations, gold demand is usually high, as investors tend to include gold as a safe asset in their portfolios for hedging purposes." Furthermore, "The key factor for industrial metals next year is China's economic development. There is a forecast that the Chinese government will focus more on political stabilization than economic stimulus," he explained. However, he added, "In the energy transition process, copper, aluminum, and battery metals will inevitably see long-term demand growth."

Henik, who is originally from Korea, earned a bachelor's degree in economics and finance from Kalamazoo College and an MBA in international management with a focus on economics and finance from the University of Chicago Booth School of Business. Since joining CME Group in 2011, he has led strategic development and profitability management of global metals products. He currently serves on the company's Diversity & Inclusion (D&I) committee. Additionally, he is a member of the subcommittee of the Commodity Futures Trading Commission (CFTC)'s Energy and Environmental Markets Advisory Committee (EEMAC), advising on the role of metals in the energy transition process.

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