In line with growing demand for electric vehicles, SGX looking to launch energy metals derivative contracts on raw materials needed in making batteries, such as cobalt metal, cobalt hydroxide, lithium carbonate and lithium hydroxide.
SGX will be partnering with Fastmarkets, the price reporting agency for these derivative contracts, and expects to launch these new contracts by July this year, subject to regulatory approval.
SGX hopes to provide via, the trading of these contracts, a pricing benchmark and tool for market participants to manage price risk exposures on energy metals required to build the batteries.
SGX is already an active market for the trading of other commodities ranging from iron ore to rubber.
“2022 will see a crystallisation of ESG initiatives with the global economy embarking on a strong sustainability drive towards net zero promises. The strong momentum we have seen in electric vehicle adoption will continue, with battery metals providing the crucial backbone underpinning the green movement,” says William Chin, head of commodities at SGX.
“With the launch of the energy metals derivative contracts, we will be providing our clients with unique capital efficiencies in a ‘virtual car complex’ alongside our global rubber benchmark, allowing market participants to undertake price risk management of key raw materials used in car production,” he adds.
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