The Lithium Market Is Hotter Than Ever and Traders Are Moving In – by Mark Burton, Archie Hunter and Yvonne Yue Li (Bloomberg News – October 29, 2022)

(Bloomberg) — When the oil market liberalized in the 1970s, a group of commodity trading buccaneers led by the infamous Marc Rich made fortunes by connecting buyers and sellers and surfing the price swings of this newly tradable commodity. Half a century later, some of Rich’s spiritual descendants are hoping to pull off a similar trick in lithium.

A vital component in most electric-vehicle batteries, lithium is becoming one of the world’s most important commodities. Prices have soared to unprecedented levels as demand forecasts keep growing, leaving automakers scrambling to secure future supplies.

Yet until fairly recently, it’s been almost impossible to trade. Prices would be fixed in long-term private contracts between the handful of dominant suppliers and their customers, with no need for middlemen.

Now, the surging demand is shaking up the way that lithium is bought and sold: Many supply deals have become dramatically shorter — with floating prices linked to the spot market — while exchanges from Chicago to Singapore are experimenting with new futures contracts.

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