Beijing opens lithium futures to foreign traders to cement pricing power over US

Miners, battery makers and traders outside China can now trade lithium carbonate futures and options on the Guangzhou Futures Exchange.

Beijing has unveiled new measures to keep its tight grip on lithium prices, in a move that may give it an edge over the US in the key material vital for electric vehicle and energy storage.

Following mining endeavours worldwide to secure supplies, Chinese authorities announced they would allow offshore industrial players to trade lithium carbonate onshore to cement its pricing power.

Effective July 3, the Guangzhou Futures Exchange, one of China’s major commodity bourses, began allowing miners, battery makers and traders outside China to trade lithium carbonate futures and options.

Foreign investors were permitted to use US dollars as margin, but the trading and settlement should be denominated in Chinese yuan, according to its notice.

“As a major importer, [China] logically wants to have some say in benchmark pricing,” said Lucas Zhang Liutong, director of Hong Kong-based consultancy WaterRock Energy Economics.

“[The move] is mostly to help increase the trading liquidity and help to boost its pricing role for lithium carbonate.”

Previously, futures trading was only open to qualified foreign institutional investors starting in March 2025.

The move comes as the US is also stepping up efforts to secure the supply of lithium, with the Department of Defense putting out a tender for US$300 million of lithium carbonate.

While China supplied more than 64 per cent of global lithium cathode materials last year, only 16.5 per cent of worldwide lithium reserves are located in the country, making it the world’s largest importer of lithium ore.

Lithium is a key raw material for rechargeable batteries widely used in electric vehicles, energy storage systems, drones, home appliances and smartphones.

The mineral has regained global attention in recent months after conflicts in the Middle East and tighter export controls by some reserve-rich countries like Zimbabwe fuelled concerns about energy independence and resource nationalism.

S&P Global Ratings said China would determine global lithium prices for the next few years, via its dominance in refining and end-use activities by companies such as Tianqi Lithium and Contemporary Amperex Technology Co Limited, or CATL.

Prices of lithium carbonate traded in mainland China stood at around 165,000 yuan (US$24,317) per tonne on Monday, retreating from this year’s peak of over 200,000 yuan per tonne, but still 166 per cent higher than the low of around 62,000 yuan per tonne in July 2025.

Separately, the tender put out by the US Defense Logistics Agency was seeking more than 35.6 million pounds of battery-use lithium carbonate for no more than US$300 million via a five-year contract. Tender offers close on July 17.

The amount was equivalent to the 15,470 tonnes the US imported over the 12 months through October 2025, according to a report by the Global Trade Algorithmic Intelligence Centre.

In September, Washington took a 5 per cent stake in Lithium Americas and 5 per cent ownership of its Thacker Pass lithium mining joint venture in Nevada.

However, US-made lithium carbonate was expected to have a “sizeable premium” to the commonly quoted prices of lithium from China given its domestic production, said Goldman Sachs in a report on July 1.