Guangzhou Lithium Futures Sink by Limit Despite Another Trading Fee Hike
Qi Qi
DATE:  Dec 05 2023
/ SOURCE:  Yicai
Guangzhou Lithium Futures Sink by Limit Despite Another Trading Fee Hike Guangzhou Lithium Futures Sink by Limit Despite Another Trading Fee Hike

(Yicai) Dec. 5 -- Prices of lithium carbonate futures traded on the Guangzhou Futures Exchange plunged by the daily trading limit for the second straight day even as the bourse pushed ahead with a plan to raise transaction costs for the second time in a week to stem the selloff.

LC2401, the GFE’s most-actively traded futures contract for lithium carbonate, was down 7 percent to a new low of CNY93,050 (USD13,024) as of 1.42 p.m. today, bringing the decline to more than 60 percent since it began trading on July 21. Trading volumes have surged.

Prices of lithium carbonate, a chemical compound used mainly in lithium-ion batteries for automobiles, have been falling since last month, pushing short-sellers into the futures market and leading to more market volatility.

As the delivery date for the LC2401 contract is not far off, if traders keep their positions until the end, a product delivery shortfall may arise, an industry professional told Yicai.

The last trading day for the contract is the 10th trading day of January and the delivery deadline is three trading days after that. Investors have over 150,000 tons of open LC2401 positions.

The GFE announced yesterday that from tomorrow, it will raise the transaction fee for LC2401 to 0.032 percent of the asset value from 0.008 percent. Moreover, the handling fee for closing new positions within the same day will be 0.032 percent, also up from 0.008 percent, which it was raised to just yesterday.

The GFE also said that traders who are connected with futures companies cannot keep LC2401 positions of more than 2,000 tons on a single day, whereas the previous limit was 10,000 tons. These new rules only apply to the LC2401 contract.

A source at the exchange told Yicai that the GFE has brought out the stricter rules to damp down overheated trading while guiding investors to trade rationally and ensure stable market operation.

Editors: Dou Shicong, Emmi Laine 

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Keywords:   Lithium Carbonate,Guangzhou Futures Exchange,electric vehicle,battery material