By Eric Onstad
LONDON (Reuters) – The Singapore-based Abaxx commodities exchange plans to launch a physically deliverable lithium carbonate contract within weeks after the recent start of its nickel futures, company executives said.
The exchange, owned by Canada-listed Abaxx Technologies Inc, kicked off trading of its nickel sulphate contract on Friday, the first for its battery products.
Outside China, there are currently no lithium carbonate futures contracts that are physically deliverable, said Sacha Lifschitz, director of metals markets at Abaxx, who formerly worked for trading houses Glencore and Concord Resources.
“All the other (lithium carbonate) contracts outside of China are cash-settled. So we see a clear demand and need,” Lifschitz told Reuters.
China’s Guangzhou Futures Exchange has seen strong growth in its lithium carbonate futures since their launch in July 2023, but there are hurdles for foreigners to participate.
Lithium hydroxide, another processed form of the mineral used in electric vehicle batteries, was not suitable for a physically delivered contract because it cannot be stored for any length of time.
Abaxx was working with a major producer of lithium carbonate to support the contract, Lifschitz added.
The exchange’s nickel contract is the world’s first futures in nickel sulphate and saw a block trade on the first day between trader Traxys and HNK Alpha, brokered by StoneX, Abaxx said in a statement.
There are two approved brands for the contract, both from producer Zhejiang Huayou Cobalt, but Abaxx hopes to add more brands and producers, Lifschitz said.
Abaxx had delayed the launch of the nickel sulphate contract after BHP, which had backed the initiative, announced the suspension of its Kwinana nickel sulphate refinery and other facilities in Western Australia.
The nickel sulphate contract is priced in dollars and physically deliverable in Singapore, but additional delivery points in Rotterdam and Baltimore are expected to be added.
Abaxx’s nickel contract has some parallels with the world’s more liquid and active nickel contract on the London Metal Exchange.
The Abaxx delivery date is the third Wednesday of every month, which is the same date that LME contracts expire, while the Abaxx daily settlement price occurs at 1330 London time, shortly after the official LME nickel price is determined.
“You don’t have to reinvent the wheel. It’s what the industry is used to,” Lifschitz said.
(Reporting by Eric Onstad; Editing by Jan Harvey)
