(Yicai Global) July 21 -- China's first batch of lithium carbonate futures all opened down on their first day of trading on the Guangzhou Futures Exchange today, indicating that investors lack confidence in predicting the price of the raw material used to make electric car batteries.

The most-traded contract due in January 2024 sank 3 percent as markets opened, and this had widened to 12.2 percent as of 2 p.m. China time. The other six contracts plunged by the exchange-imposed first-day fluctuation of 14 percent.

The seven lithium carbonate futures contracts all have a benchmark price of CNY246,000 (USD34,299) per ton with maturity dates between January 2024 and July 2024, the Guangzhou Futures Exchange said yesterday.

There have been big swings in the price of lithium carbonate in recent years as demand booms. The price of battery-grade lithium carbonate prices reached an all-time high of nearly CNY600,000 (USD83,600) per ton last November, surging over 11 times from that at the beginning of 2021.

But since then prices tumbled to as low as CNY176,500 (USD24,600) per ton in April as more capacity came online. The spot price of lithium carbonate is now around CNY300,000 per ton, about 20 percent higher than the benchmark price on the Guangzhou Futures Exchange.

The large fluctuations in the price of lithium carbonate are mainly due to speculation as the material is not in short supply and is not difficult to produce, Wang Yu, chief executive officer of Chinese battery maker Farasis Energy, said during the 2023 China EV100 Forum in April. It is therefore not reasonable for its price to climb to between CNY500,000 and CNY600,000 a ton.

Contemporary Amperex Technology, a battery giant with mineral resources, said earlier this year that it will price its batteries at a cost of CNY200,000 per ton of lithium carbonate, less than half the going price of CNY500,000 at the time, in return for long-term battery orders from big NEV makers.

Editors: Tang Shihua, Kim Taylor