(Yicai) July 3 -- Lithium carbonate futures and options listed on the Guangzhou Futures Exchange (GFEX), the only Chinese exchange offering the battery material contracts, have been opened to all overseas investors as specified domestic products starting today.

The contracts are the first products on the GFEX to be opened through the specified domestic products mechanism, which allows all overseas investors to participate directly in trading, a GFEX representative told Yicai. Previously, the exchange had only opened futures and options for industrial silicon, lithium carbonate, and polysilicon to qualified foreign investors (QFIs) in March last year.

The move expands access beyond the QFI scheme, under which overseas investors must obtain approval from the China Securities Regulatory Commission and custody related assets with domestic institutions.

The broader opening is expected to allow overseas companies across the lithium supply chain to hedge production and sales price risks directly in China's market, reducing reliance on relatively illiquid overseas contracts. As of the end of May, China had nearly 170 listed futures and options products, including 35 specified domestic products open to global investors and 115 products available to QFIs, meaning almost 70 percent of all products are now accessible to overseas investors through one of the two channels.

Once the opening takes effect, overseas upstream and downstream companies will be able to enter the market directly to hedge against price fluctuations in production and sales without relying on niche overseas contracts, Wang Xiaoguo, general manager of Citic Futures, told Yicai.

As new energy technologies continue to evolve, demand for lithium carbonate as a key raw material is rising steadily, while major lithium battery traders in Japan and South Korea are closely watching the internationalization of lithium carbonate futures, Wang added.

Lithium resource projects typically require long development cycles and substantial capital investment. Against a backdrop of volatile prices, the contracts can help industry participants lock in future revenue, stabilize project returns, and support the security of global lithium supply, the GFEX representative said.

Lithium carbonate futures and options were launched on the GFEX in July 2023. As of June, their average daily transaction value had reached CNY25.8 billion (USD3.8 billion), providing ample liquidity for corporate risk management, the exchange said.

Editors: Dou Shicong, Emmi Laine