ChinaOpensLithiumFuturesMarkettoForeignTraders

The Guangzhou Futures Exchange has officially opened its lithium carbonate futures and options to overseas traders.

The policy, which took effect July 3, applies to contracts for July delivery and beyond. Foreign investors are permitted to use U.S. dollars as margin collateral for trading.

The market opening marks China’s latest effort to solidify its pricing power over a critical battery metal while offering global electric vehicle supply chain participants a new tool to hedge against severe price swings.

Prices for lithium carbonate have rallied 33.6% since the start of the year. The most actively traded contract closed at 168,800 yuan ($24,848) per ton on the day of the launch. The exchange noted that global producers and traders increasingly reference its futures prices for physical cargo contracts.

The exchange expects foreign participation to improve price discovery and deepen liquidity. However, brokerages such as COFCO Futures warned that the influx of international capital could also amplify market volatility.

Lithium is the first product the Guangzhou exchange has opened to foreign investors. The move follows similar efforts by other Chinese bourses to internationalize commodity contracts for crude oil, iron ore, and nickel.

Contact editor Han Wei (weihan@caixin.com)