Chart 1: Record activity in 2024

A total of 91,000 tons of Lithium Hydroxide (LTH) futures were traded during 2024, a more than fourfold increase versus the prior year (when 20,000 tons changed hands). Cobalt  (COB) futures trading remained solid, with over 28,000 tons traded, virtually the same as in 2023, and despite a challenging physical market environment. The increase in liquidity was broad based, with both nearby and deferred month contracts all seeing activity. Cobalt in particular is traded across a long-time horizon, with 2028 maturity contract months changing hands. In addition, we also saw participants enter the listed options market on Cobalt and Lithium futures for the first time.

Monthly volumes in Battery Metal derivatives

Monthly Volumes in CME Group Battery Metal Derivatives
Source: CME Group. Includes Lithium Hydroxide futures and options, Lithium Carbonate futures, Spodumene futures, Cobalt Metal futures and options, Cobalt Hydroxide futures and Molybdenum futures.

Chart 2: A diverse and growing universe of market participants

The growth in market activity has attracted a diverse range of market participants, including banks, physical traders, producers, specialized commodity funds as well as ETF providers. We now see routinely 30 to 40 different firms transacting in Cobalt futures, and up to 60 different entities accessing our Lithium futures market each month.

Unique number of market participants per month

Unique Number of Market Participants per Month
Source: CME Group

Chart 3: Open interest crosses the 50,000 tons threshold

Increased trading across the Battery Metals suite has pushed open interest, the number of contracts open at the Exchange, above the 50,000 tons threshold. This is mostly driven by the benchmark Cobalt Metal (COB) futures (with over 15,000 tons open interest, equivalent to $370m notional) and Lithium Hydroxide (LTH) futures contract (over 32,000 tons open interest, equivalent to $310M), but the Exchange has activity and open interest across the entire product suite, including Cobalt and Lithium options, Cobalt Hydroxide, Lithium Carbonate, Spodumene and Molybdenum.

Battery metals open interest

Battery Metals Open Interest
Source: CME Group, data as of Dec. 31, 2024

Chart 4: Cobalt and lithium forward remain in contango

Spot prices in both Cobalt and Lithium weakened over the year cCobalt down 20% from $14 to $11/lbs. and lithium down over 40% from $17 to $9.50/kg) and the forward curves for each remain in a healthy contango. However, comparing the forward curves to one year ago, contango levels have decreased over the year on a relative basis. This could indicate expectations that the market is finding a new balance, and that the industry may face a somewhat tighter physical market in the not-too-far future.

Cobalt (Left) and Lithium (Right) Forward Curves in December 2023 and December 2024

Cobalt (Left) and Lithium (Right) Forward Curves in December 2023 and December 2024
Cobalt (Left) and Lithium (Right) Forward Curves in December 2023 and December 2024

Chart 5: The emergence of ‘lithium producer shorts’

A common misconception of the emerging lithium derivatives market is that it is mainly used by financial speculators while lithium producers remain on the sidelines. However, commitment of trader data compiled by the CFTC show how short positions by commercial participants have shot up during 2024, accounting for over 8,000 tons net short as of late December 2024. It is mostly swap dealers that hold the other side of these positions, with managed money longs and shorts virtually cancelling each other out.

CFTC COT report for producer/merchant/processor/user Lithium Hydroxide futures

 CFTC COT Report for Producer/Merchant/Processor/User Lithium Hydroxide Futures
Source: CFTC COT Report

Gregor Spilker
Gregor Spilker
Gregor Spilker

is Senior Director of Metals/Energy product research and development at CME Group. He's based in New York

All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.

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