Trading activity in Chinese lithium futures has surged, with investors facing heightened levels of volatility as speculation around supply uncertainty swirls.
Volumes for the Guangzhou Futures Exchange in July racked up the busiest month since the lithium contract was launched in 2023, according to data from the bourse. Open interest – the number of outstanding bets on prices – was at a record too, with the surge continuing into this month.
The exchange has become a popular venue for betting on lithium, a key material for the electric-vehicle (EV) transition that in recent years has been hit by a glut and signs of slower growth in EV battery demand. Now, uncertainty over the supply outlook in Yichun, Jiangxi province – one of the nation’s major production hubs – has bulls and bears jousting over price trajectories, leading to wild swings.
The most-active futures surpassed 80,000 yuan (US$11,135) a tonne in July, before falling back to 67,840 yuan by the end of the month. Prices in August then rose more than 30 per cent to above 90,000 yuan, before paring monthly gains to around 21 per cent as of Thursday.
“Chinese commodity exchanges have a very high share of participation from speculative or individual investors – much higher than commodity exchanges outside China – which can lead to greater volatility on a daily basis,” said Przemek Koralewski, global head of market development at Fastmarkets.
