Lithium

Trading lithium has surged in popularity following the global rise in demand for electric vehicles. Although the commodity is not directly tradeable, investors can gain exposure through stocks, ETFs, CFDs and futures. This tutorial unpacks lithium trading economics, from the early uses of the chemical element to the factors that affect its prices, plus the pros and cons of investing in this volatile market. Our experts have also listed the top lithium brokers:

Best Brokers For Trading Lithium

These are the 1 best brokers for trading Lithium:

#1
IG

Trading Lithium Basics

Lithium is a versatile alkali element and metal, used in pharmaceuticals, glass, cermaics and alloys. However, the most common use of lithium today is in batteries for digital devices, smartphones and electric cars.

Lithium, in its compound form, is extracted from brine deposits or mined from igneous rock. There are two main types of lithium, namely lithium carbonate and lithium hydroxide, with the latter being predominantly used in battery production.

Australia, Chile and China are the biggest producers of lithium. Among these, Australia is the leading producer of hard rock lithium, making it home to key suppliers of the electric vehicle market, including Albemarle and Pilbara Minerals.

Although not directly tradeable as a commodity like gold or silver, trading lithium-based assets is possible via stocks, ETFs and derivatives such as CFDs and futures.

History

The discovery of lithium dates to 1817, when Swedish chemist Johan August Arfwedson detected the presence of lithium whilst analyzing petalite ore.

Over time, scientists discovered new techniques to isolate pure lithium from its salts through electrolysis. This eventually led to its commercial production by the German company Metallgesellschaft AG in 1923.

In the mid-1900s psychiatrists discovered that lithium could be used to treat bipolar disorder and depression. Additionally, during World War II, lithium grease was used in aircraft engines, before later being used in the production of nuclear fusion weapons during the Cold War.

Today, the demand for lithium-ion batteries has surged, making lithium a critical component in the global geopolitical competition for renewable energy.

Top Lithium-Producing Countries

In recent years, around 90% of global lithium production and trade flows came from three countries: Australia, Chile and China.

Largest Lithium Producers, 2021
Country Volume (tonnes)
Australia 55,416
Chile 26,000
China 14,000
Argentina 5,967
Brazil 1,500
Zimbabwe 1,200
Portugal 900
United States 900

What Influences The Price Of Lithium?

Pros Of Trading Lithium

Cons Of Trading Lithium

Ways To Trade Lithium

Plus500 Global X Lithium & Battery Tech
Plus500 Global X Lithium & Battery Tech Conditions

Comparing Lithium Brokers

How To Trade Lithium

  1. Find a broker: Choose a brokerage firm that offers lithium trading via stocks, ETFs or derivatives. Consider the broker’s trading fees, available platforms, regulatory oversight and account types.
  2. Analyze the market: Once you have chosen your instrument, make use of any available resources and market data to analyze the lithium market.
  3. Set risk parameters and monitor position: Set appropriate risk management criteria to protect your profit margin and limit your exposure. Open your position and stay ahead of any market updates that could negatively impact the price of lithium.

Final Word On Trading Lithium

Investing in lithium stocks and derivatives provides opportunities to tap into the expanding EV industry and the worldwide shift towards a more sustainable, low-carbon economy. Traders have the option to diversify their portfolio and hedge against the price risks of lithium through CFDs, ETFs, futures and stocks.

With that said, many consumers remain hesitant about electric vehicles and concerns regarding lithium production could threaten future prices of lithium stocks and derivatives in the short and long-term.

To get started, see our list of the best lithium brokers.

FAQ

How Can I Trade Lithium?

You can invest in shares and ETFs of lithium-based companies, such as Tesla or Pilbara Minerals. Alternatively, you can trade derivatives like the Global X Lithium & Battery Tech ETF CFD or Lithium Hydroxide CIF futures. To access these trading vehicles, sign up with one of our recommended lithium brokers.

What Is Lithium Trading At?

Lithium prices depend on the stock or derivative product being traded. You can find real-time lithium price charts using analytics tools such as TradingView.

Can You Trade Lithium Futures?

Yes, you can trade Lithium Hydroxide CIF futures contracts at the London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME). These are cash-settled contracts meaning you do not take physical delivery of the underlying asset.

Who Is The Largest Exporter Of Lithium?

Australia, Chile and China are the largest producers and exporters of lithium, accounting for approximately 90% of global production. The largest lithium mining companies operating in these countries include Gangfeng Lithium, Albemarle, Tianqi Lithium and Sociedad Quimica y Minera de Chile.

Is Lithium Traded On The Stock Market?

Publicly traded companies that are involved in the mining or production of lithium are listed on leading stock markets. Examples include Albemarle, listed on the New York Stock Exchange (NYSE) and Gangfeng Lithium, listed on the Shenzhen Stock Exchange (SSE).

Article Sources

The writing and editorial team at DayTrading.com use credible sources to support their work. These include government agencies, white papers, research institutes, and engagement with industry professionals. Content is written free from bias and is fact-checked where appropriate. Learn more about why you can trust DayTrading.com