Singapore plans 2022 launch of battery metal contracts

The Singapore Exchange (SGX) is looking to introduce battery metal contracts next year, allowing firms to hedge price risks and volatility as trading of raw materials for electric vehicles (EVs) picks up pace amid a global shift to cleaner transport.

"We are currently in close discussion with the industry to better understand the needs of market participants and while this is an ongoing process we are looking to go to market in the first half of 2022," William Chin, head of commodities at SGX, said today.

Economies around the world are looking to cut their dependency on fossil fuels by ramping up EV production, leading to firmer demand for batteries and battery metals such as nickel, cobalt and lithium.

"As an international derivatives hub for global investors, EVs are a core consideration in our ESG [environmental, social and governance] strategy for commodities," Chin said. "We are not simply looking at this as another product launch, rather how we could add value to the market and ecosystem."

Global EV sales rose by 151pc on the year in January-April and are expected to increase by over 50pc this year, according to research by Australian investment bank Macquarie.

Rising sales are driving demand for batteries and battery metals. Macquarie estimates that the increase in EV sales during the first four months of this year translated to a 144pc rise in lithium demand from the battery market, a 105pc rise in nickel demand and an 84pc rise in cobalt demand during the same period.

The SGX has been looking to expand its commodity market presence, with plans to also launch a carbon credit exchange by the end of this year.

By Reena Nathan