CME Group set to launch cobalt hydroxide futures next month
- September 20, 2023
- Posted by: Quatro Strategies
- Categories: Mining & Metals, Rare Earths & Commodities, United States
CME Group, one of the most prominent derivatives marketplaces globally, is set to introduce Cobalt Hydroxide futures on October 23, subject to relevant regulatory approvals. This move comes in response to the constantly evolving hedging requirements within the swiftly expanding electric vehicle (EV) sector.
The Cobalt Hydroxide futures will be financially settled based on Fastmarkets’ cobalt hydroxide price assessment. This is a significant step forward in the market, providing an effective means to hedge price fluctuations between standard-grade cobalt metal globally and local hydroxide prices delivered into China. China is a crucial player in the EV supply chain, refining hydroxide into battery-grade material.
The launch of Cobalt Hydroxide futures underscores the escalating demand for effective hedging mechanisms throughout the cobalt supply chain. As the battery raw material markets continue to evolve and the electric vehicle sector sees substantial growth, the necessity for risk mitigation tools becomes increasingly apparent. CME Group’s introduction of this futures contract based on Fastmarkets’ cobalt hydroxide price will be instrumental in empowering market participants to manage risk effectively in these dynamically changing markets.
These futures will complement Cobalt Metal futures, which have become the global benchmark for cobalt prices since their inception in December 2020. Trading volumes in Cobalt Metal futures have already exceeded the total for the preceding year, showcasing the growing interest and participation in this market. The open interest in Cobalt Metal futures has quadrupled over the last year, underscoring the industry’s growing interest in effectively managing cobalt price risks.
Overall, the introduction of Cobalt Hydroxide futures by CME Group is a crucial step in addressing the intricate hedging needs within the cobalt supply chain, particularly in the backdrop of the rapidly advancing electric vehicle market. The availability of these futures contracts will provide market participants with a vital tool to mitigate risks and navigate the market more effectively as it continues to evolve.
By QUATRO Strategies International Inc.
QUATRO Strategies International Inc. is the leading business insights and corporate strategy company based in Toronto, Ontario. Through our unique services, we counsel our clients on their key strategic issues, leveraging our deep industry expertise and using analytical rigor to help them make informed decisions to establish a competitive edge in the marketplace.
Interested in learning more?
Sign up for Top Insights Today
Top Insights Today delivers the latest insights straight to your inbox.
You will get daily industry insights on
Oil & Gas, Rare Earths & Commodities, Mining & Metals, EVs & Battery Technology, ESG & Renewable Energy, AI & Semiconductors, Aerospace & Defense, Sanctions & Regulation, Business & Politics.
Read more insights
EU targets Russia’s oil lifeline with sweeping maritime services ban
The European Commission’s new sanctions proposal is an attempt to move from managing Russia’s seaborne oil exports to structurally impairing them. Instead of relying on the G7 price-cap model, which tried to keep Russian barrels flowing to third countries while limiting Moscow’s revenue by conditioning Western shipping services on compliance, the Commission is proposing a blanket prohibition on any services that support Russia’s seaborne crude exports.
If adopted, the measure would sever a core artery of Russia’s oil trade because a significant share of those exports still rely on Western-owned tankers and Western service ecosystems, particularly shipping capacity and related services linked to Greece, Cyprus, and Malta.
Trump revives EU auto tariff threat, deepening Transatlantic strain
The Trump administration is now signaling that its threat to raise tariffs on EU car imports from 15% back to 25% is not just negotiating theater. U.S. Trade Representative Jamieson Greer told EU and German officials over the weekend that Washington would move forward with the increase, while also describing the tariff as “one part of the deal,” suggesting the administration still sees it as leverage inside a broader bargaining framework rather than a fully settled end state.
As of Monday afternoon, the higher tariff had not yet been formally adopted. The immediate dispute is about alleged EU non-compliance with last summer’s trade deal, a claim Brussels rejects. Trump said the bloc had failed to uphold the agreement and that EU officials responded by calling the move arbitrary and warning that they would keep options open to defend European interests.
OPEC+ falls short on output goals as global oil market stays tight
Despite planning their first collective output increase in over three years, OPEC+ producers are struggling to materially raise oil production in 2025, leaving the global crude market far tighter than expected. The disparity between stated targets and actual deliveries has helped push Brent crude prices back up to $68 per barrel, up from a low of $58 in April, highlighting growing tensions between market expectations and supply realities.
Officially, the OPEC+ coalition, led by Saudi Arabia and Russia, intended to boost production by 2.5 million barrels per day (bpd) between March and September. But data suggests actual increases are falling significantly short. Much of the shortfall stems from two factors: some countries are physically unable to increase production, while others are under punitive constraints imposed by the group for exceeding past quotas.