I read some days ago in LTR forum (I can't remember the thread), posts about short-selling by some Chinese lithium producers in the future market. The posts claimed that the short-selling is done to depress the price of lithium.
Searching online about this issue, all I can find is news about Chinese lithium producers starting to hedge in the future market to manage the volatility of lithium price.
https://www.mining.com/web/chinese-lithium-producers-embrace-hedging-to-manage-volatility/So the short-selling by the Chinese lithium producers in the future market is NOT to depress the price of lithium, as claimed in those posts, but in fact it is to protect them if the price of lithium falls further. That is what hedging is! It is a risk management tool.
CME Group writes:
"It is important to note that by hedging, a company is trying to mitigate risk, not make additional profit through speculation. Therefore, if properly hedged, adverse and favourable price fluctuations will net the same result."
https://www.cmegroup.com/education/lessons/hedging-with-lithium-futures.htmlBut why did the Chinese Chinese lithium producers start to hedge in the future market? Because the price of lithium is
volatile!!. The news (mining.com) says: "Chinese lithium processors are ratcheting up hedging to offset
wild swings in the battery metal".
But how can that be? How can the price of lithium is ever volatile? I have read so many posts saying that the Chinese or the CCP control or manipulate the price of lithium. If they really control or manipulate the price of lithium, surely the price of lithium would remain stable and low so that they can maximize their profit. Right?
The volatility of lithium price contradicts the claim that the Chinese or the CCP control or manipulate the price of lithium. They both cannot be true. If the volatility of lithium price is true, then the the claim of manipulation by the CCP is false. And if the the claim of manipulation by the CCP is true, then the volatility of lithium price is false.
In this case, judging by the fact that the Chinese lithium producers started to hedge, it is much more reasonable -
rational - to believe that volatility of lithium price is true. Therefore the claim that the Chinese or the CCP control or manipulate the price of lithium is
false. And
irrational!!
(20min delay)