Lithium rally is super-charged with speculative spice
LONDON, Aug 18 (Reuters) – News that Chinese battery giant Contemporary Amperex Technology (CATL) (300750.SZ),has suspended operations at its giant Jianxiawo mine has lit a fire under the lithium market.
Jianxiawo is China’s largest lithium mine and even CATL’s anticipated three-month suspension will make a significant dent in a massively over-supplied market. Nor is it the only Chinese producer in the lithium hub of Yichun facing heightened bureaucratic scrutiny.
But the price surge looks over-exuberant. Any underlying market signal has been swamped by speculative excess on China’s Guangzhou Futures Exchange.
Guangzhou only started trading lithium carbonate futures in July 2023 but has muscled out the Wuxi Stainless Steel Exchange as China’s primary price reference point for the battery metal.
Wuxi was a problematic indicator of China’s physical lithium market and Guangzhou is now also battling to contain a speculative frenzy.
Guangzhou’s lithium contract notched up turnover of nearly 24 million lots in July, far exceeding the previous monthly record, while open interest climbed to an all-time high of 699,164 lots.
Trading activity in the options contract mushroomed from 2.9 million lots in June to 8.6 million last month.
The exchange’s volume figures denote both buy and sell transactions but, even allowing for this double-count, July’s turnover was many multiples the size of a global market that is growing fast but still only amounts to around 1.6 million tons each year.
Guangzhou only started trading lithium carbonate futures in July 2023 but has muscled out the Wuxi Stainless Steel Exchange as China’s primary price reference point for the battery metal.
Wuxi was a problematic indicator of China’s physical lithium market and Guangzhou is now also battling to contain a speculative frenzy.
Guangzhou’s lithium contract notched up turnover of nearly 24 million lots in July, far exceeding the previous monthly record, while open interest climbed to an all-time high of 699,164 lots.
Trading activity in the options contract mushroomed from 2.9 million lots in June to 8.6 million last month.
The exchange’s volume figures denote both buy and sell transactions but, even allowing for this double-count, July’s turnover was many multiples the size of a global market that is growing fast but still only amounts to around 1.6 million tons each year.
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Lithium rally is super-charged with speculative spice, source
