Lithium carbonate futures prices plummeted during the first day of trading at China’s Guangzhou Futures Exchange (GFEX) on Friday 21 July, Kallanish reports.  

Seven lithium carbonate futures contracts were debuted with expiry months spread across January-July 2024. This is the first time futures for lithium are being traded in China.

As of closing on 21 July, all seven contracts dropped more than CNY 30,000 ($4,178)/tonne from their base settlement price. Contract for January delivery, the most traded futures on the day, declined around 12.6% from its base settlement price of CNY 246,000/t. The contract opened at a price of CNY 238,900/t and fell to CNY 215,000/t.

The other contracts fell by the exchange’s maximum daily limit of 14% closing at CNY 211,600/t.  

According to data from the GFEX, the total transaction volume reached 65,439 lots, corresponding to 65,439 t of lithium carbonate based on the exchange’s trading rules.

The performance seems to be in line with recent spot market trends, with a bearish sentiment hanging around due to expected oversupply in 2024 and likely slower demand in the first months of the year.

“As global resource projects continue to increase in volume in the future, the surplus of resources will force the price of raw materials to continue to decline. Ping An Futures believes that the price of lithium carbonate futures will hardly reverse, and there will still be downward pressure in the future,” the Shenzhen-based firm says.

GFEX is believed to be the fourth lithium carbonate futures contract trader globally, together with CME, LME and SGX. The exchange-traded contracts should help increase transparency in the industry and reduce vulnerability to commodity volatility by enabling prices to be hedged.