Spodumene is a key feedstock in the production of lithium salts, which are a crucial component in lithium-ion batteries. Because spodumene is a key feedstock, the price can be viewed as an indicator of the overall health of the lithium market. It directly affects the overall prices of battery-grade lithium hydroxide and lithium carbonate. Increasing demand for&#;electric vehicles (EVs), energy storage systems (ESS), consumer electronics and emerging technologies makes the price of spodumene even more significant.
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Production of spodumene has increased significantly in recent years, including the emergence of new regions of production. This trend is set to continue while demand for lithium increases.
Monitoring spodumene prices can provide insight into supply-and-demand imbalances, production trends and market competitiveness.
Futures contracts are standardized, legally binding financial agreements to buy or sell a specific underlying asset at a predetermined price at a future date. Futures contracts, which are traded on futures exchanges, provide a way for market participants to hedge against price fluctuations, speculate on price movements and manage risk. Futures markets facilitate the trade of futures contracts, where participants can buy or sell contracts on various assets such as commodities. These markets provide a platform for price discovery, risk management and market speculation.
Physical delivery involves the actual transfer of the underlying asset at contract expiration, while cash settlement settles contract obligations through cash payments based on price differentials. The choice between the two depends on contract specifications and market preferences. The CME/Fastmarkets spodumene futures contract is a cash-settled contract.
Liquidity has been growing recently in the spodumene market against a backdrop of notable growth and evolution in the wider lithium market. Although spodumene and lithium salts prices remain correlated, they have been disconnecting from each other more frequently in recent weeks. These developments warrant a separate futures contract for spodumene to allow market participants to better manage their risk and exposure to this critical raw material.
Spot trades feed into Fastmarkets&#; prices, which are also being utilized in physical contracts. This guarantees futures convergence to the spot price at expiry.
This contract will be important for market participants across the entire lithium supply chain. This includes producers, refiners, traders, banks, brokers and battery manufacturers. Each of these groups plays a distinct role in market liquidity, risk management and price discovery.
Market participants will be able to utilize the futures contract to manage their spodumene risk by making a like-for-like hedge on a futures exchange, which has not historically been possible. In volatile markets, market participants must ensure they are protected against potentially adverse price fluctuations by implementing risk-management strategies. This contract will give participants the ability to hedge their risk and prioritize stable cashflows. The new launch will help to build liquidity and transparency in both the spodumene and wider lithium markets.
Some market participants will take advantage of trading the spread between the lithium hydroxide and spodumene futures contracts, adding further liquidity to other contracts in the BRM suite listed on the CME. A futures market should attract finance because it will increase transparency across the forward curve and allow the financing party to better calculate and price the risk associated with financing projects.
Spodumene is typically priced at the 6% benchmark, and that is where Fastmarkets observes the most liquidity. The industry uses and reports this on a standardized basis, frequently citing Fastmarkets&#; assessments in contracts and official company reports. Fastmarkets spodumene min 6% Li2O, spot price, CIF China ($/tonne, daily) assessment accepts min 5.0% Li2O and max 6.1% Li2O if it can be normalized to 6%.
Fastmarkets&#; spodumene min 6% Li2O, spot price, cif China is a daily price assessment published at 13:00 UK time, following Fastmarkets&#; UK pricing calendar. The price assessment follows IOSCO principles and is subject to annual IOSCO audits, ensuring the highest standards in price reporting. The price is assessed by a team of expert reporters around the world. They survey active market participants, collecting spot deals, bids and offers and deals heard in the market or, in the absence of active data, indications of the tradable level. Once the data is collected, the reporter assesses the price and submits a rationale for that assessment, outlining all the data collected that session and explaining why the price has been set at that level. The price then goes through two additional stages of review by senior members of the team before publication.
A full explanation of the Fastmarkets lithium methodology can be found here.
Fastmarkets continues to lead the way in BRM &#; it is the only PRA globally to set&#;the foundation for futures and options markets in the battery raw materials supply chain. Fastmarkets has a suite of lithium futures and options listed on three major global exchanges.&#;Lithium hydroxide futures&#;are listed on the CME, the London Metal Exchange (LME) and on the Singapore Exchange (SGX); lithium carbonate futures are traded on the CME and SGX; and lithium hydroxide options are listed on the CME. View all futures contracts here.
These crystals can grow to impressive sizes. Some of the world&#;s largest ones have been found in pegmatite deposits, reaching lengths of several meters. It is commonly found in pegmatites, which contain other industrial minerals and metal ores. These discoveries make it a lucrative option for the mining industry, especially as the need for lithium-based products grows.
Spodumene is a mineral that serves as an essential source of lithium. Its name comes from the Greek word &#;spodumenos,&#; meaning &#;burnt to ashes.&#; It was given this name due to the mineral&#;s tendency to become white or ash-coloured when exposed to air and high temperatures.
Spodumene is an inosilicate with the chemical formula LiAl(SiO3)2 composed of lithium, aluminium, and silicon. It typically occurs in prismatic, flattened crystal forms and may vary in colour, including white, grey, green, pink, or purple. The colour variations occur because of different impurities being present in the mineral.
It has a high specific gravity, typically ranging from 3.0 to 3.2. The high density is due to its lithium content and helps to differentiate it from similar-looking minerals. This feature separates it from other silicate minerals like feldspar and quartz.
Lithium extracted from spodumene is processed to create lithium carbonate or lithium hydroxide, both of which are critical raw components in lithium-ion batteries.
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We can see the economic importance of this mineral because of its lithium component. As demand for batteries surges, manufacturers require more of it to meet customers&#; needs. Spodumene is a critical feedstock in producing crucial compounds that let us incorporate electric vehicles, renewable energy storage systems, and portable electronic devices into our lives.
The battery industry is a significant lithium consumer. As the world transitions towards cleaner energy and electric mobility, the demand for lithium-ion batteries continues to grow, making spodumene mining and processing economically important.
Spodumene mining and processing operations create jobs and stimulate economic activity in regions where these resources are abundant. A significant workforce is necessary to develop successful extraction opportunities, including transportation and processing activities.
That means the increasing demand for lithium creates a long-term positive outlook for communities with spodumene. Investors see potential in supporting the supply chain to meet the growing demand from various industries.
Spodumene has several important uses, with its primary application being as a source of lithium for various industries. Here are some of the ways we&#;re working with it today.
1. Ceramics and Glass
Spodumene is sometimes used as a raw material in these industries. It can act as a fluxing agent, reducing the melting point of materials during the firing process. This property is helpful in the production of glass, enamel, and ceramic glazes.
2. High-Temperature Lubricants
Spodumene is useful for this purpose in some specialised applications. Its high melting point and ability to withstand extreme temperatures make it suitable for use in certain industrial processes.
3. Radiation Shielding
Due to its high density and ability to absorb radiation, spodumene can be used as a shielding material in some applications, such as nuclear facilities and medical equipment.
4. Lithium Production
Spodumene-derived lithium plays a critical role in producing high-performance lithium-ion batteries due to its high lithium content and suitability for battery-grade compounds. As the automotive industry transitions towards electric vehicles (EVs) to reduce carbon emissions and dependence on fossil fuels, the demand for lithium-ion batteries has grown significantly. Spodumene is used to enable this mobility change.
5. Energy Storage Systems
Spodumene is an essential lithium source for large-scale energy storage systems. It is valuable for grid-scale applications and stationary requirements, helping balance renewables&#; intermittency while making them more reliable and infrastructure-friendly. A small electric car with a 40-kWh battery would potentially need between 24 to 60 kg of lithium. In contrast, a large electric SUV with a 100-kWh battery might require up to 150 kilograms.
Although spodumene is a relatively common mineral in the planet&#;s crust, high-quality deposits suitable for commercial use are currently rare.
While spodumene is widespread in various geological settings, the economic viability of mining depends on factors such as lithium concentration, crystal size, purity, and accessibility. That&#;s why investors are keen to fund opportunities as they arise. There is significant scarcity in the current marketplace.
As lithium becomes more crucial in advancing clean energy and electric transportation, the search for viable spodumene deposits continues.