SGX plans to launch a suite of derivative contracts for battery raw materials, including cobalt metal, cobalt hydroxide, lithium carbonate and lithium hydroxide, to match the rise in the global electric vehicle market, the exchange operator said in a press release Wednesday.
The new derivative contracts, which are expected to launch in the first half of this year, are aimed at providing a pricing benchmark and a risk-management tool for exposure to energy metals for making batteries, SGX said.
SGX will be tying up with Fastmarkets for the derivatives, citing Fastmarkets role in providing benchmark pricing for battery raw materials used by industry participants in both physical trade and in contracts, the statement said.
William Chin, head of commodities at SGX said 2022 is expected to bring more enactment of ESG initiatives amid an effort to meet net-zero commitments.
“The strong momentum we have seen in electric vehicle adoption will continue, with battery metals providing the crucial backbone underpinning the green movement,” Chin said in the statement.
“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 added.