Posted on 14 Dec 2023
China's Guangzhou Futures Exchange (GFEX) has announced adjustment of price limits and trading margin standards for its lithium carbonate futures contracts.
According to GFEX's announcement on Wednesday, the daily price limit of the lithium carbonate futures contract is adjusted to 13%, and the trading margin standard is adjusted to 14% (except that the trading margin standard of the LC2401 and LC2402 contracts, adjusted to 15%).
"If the above-mentioned price limit range and trading margin standards are different from the currently implemented standards, the one with the larger range and higher standard will be used," the exchange states.
On the same day, it released a market risk warning which says the market price of lithium carbonate has fluctuated greatly recently. It urges all member units to be prepared for market risk prevention, strengthen investor education, remind investors to trade rationally, and control risks within the tolerance range.
On Monday, GFEX announced that three companies, including Shandong Ruifu Lithium, were newly added as lithium carbonate futures delivery warehouses. At the same time, it will increase the minimum guaranteed storage capacity of the nine storage points from 2,000 tonnes to 5,000t.
On the same day, the main contract was switched from LC2401 to LC2407, Kallanish notes. And it is very likely that the overall position of the 2401 contract is expected to further decrease due to limits imposed on positions, which will be effective from 21 December.
Hou Yanjun, general manager at Houshitiancheng Investment, comments: "As the sales increase slows down for new energy vehicles, the production capacity keeps increasing. In 2024, a large amount of lithium carbonate production capacity in Africa from countries such as Zimbabwe and Ethiopia will begin to be supplied. These production capacities are controlled by Chinese capitals. Based on the supply and demand gap, the market does not support a sharp rebound in lithium carbonate prices."
Previously, GFEX had announced these changes: "Starting from the settlement on 8 December, the daily price limit of the lithium carbonate futures contract is adjusted to 10%, the margin standard for speculative trading is adjusted to 12% (except that the margin standards for speculative trading of the LC2401 and LC2402 contracts are adjusted to 15%), and the margin standards for hedging transactions are all adjusted to 11%."
Source:Kallanish
