Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Goldman Sachs Group Inc. said the price of three key battery metals — cobalt, lithium and nickel — will drop over the next two years after investors wanting exposure to the green-energy transition piled in too quickly.
“Investors are fully aware that battery metals will play a crucial role in the 21st century global economy,” Goldman analysts including Nicholas Snowdon and Aditi Rai said in a note on Sunday. “Yet despite this exponential demand profile, we see the battery metals bull market as over for now.”
The long term prospects for the metals remain strong, not least because of the rapid adoption of electric vehicles, according to Goldman. But investor exuberance has led to an oversupply.
There’s been “a surge in investor capital into supply investment tied to the long term EV demand story, essentially trading a spot driven commodity as a forward-looking equity,” the analysts said. “That fundamental mispricing has in turn generated an outsized supply response well ahead of the demand trend.”
There will be a “sharp correction” in lithium prices, with the metal averaging under $54,000 a ton this year, down from a spot price of over $60,000. It will fall further to an average of just over $16,000 in 2023, the Wall Street bank said.
Cobalt will probably drop to an average of $59,500 a ton next year from roughly $80,000 now. Nickel is likely to rise almost 20% over the rest of this year to $36,500 a ton before “fundamental pressures” drive it lower again, the analysts forecast.
Still, prices could soar again after 2024.
“This phase of oversupply will ultimately sow the seeds of the battery materials super cycle over the second half of this decade,” the bank said. Then, “the demand surge will more sustainably overcome current supply growth.”
(By Paul Wallace)
8 Comments
Charlie
This article is a laugh. Nickels price was found to be pressed down by some monster short position from China, when caught out earlier this year it quadrupled over night? The only way the price of these metals will come down is if someone can show there is a massive stockpile of them. I don’t think such a stockpile exists. Gold and silver however .
Mary
Do you know the damage is done by mining for lithium Cobalt and nickel? Or do you even care?
Dylan
Why anyone would believe a corporation such as this who exists for profit is beyond me. Goldman Sachs were involved in the 2008 financial crisis who cheated millions in the name of greed. The legitimacy of such claims in the face of the future prospected demand and supply should be taken with a large grain of salt noting the aforementioned points.
Tim
Goldman Sucks are basically trying to manipulate the share price to buy in before the next big bull run. pretty obvious.
Jacob
Exactly. They’ve done this so many times. Basically their bad news stories should be a bull trigger.
Kevin Joseph
Does these commentator actually know what they are talking about, the two apparent Nicholas Snowdon and Aditi Rai talking about Lithium is utter nonsense. Who would I believe two analysts or the heads of EV companies who acknowledge they cannot obtain enough lithium. Carry on collecting your unworthy salary but I know who to believe.
Jacob
Classic Goldman Sachs. They post a story like this, and buy up their positions in functioning Lithium/Nickel mines on the resulting retail panic. This corporation has a reputation of doing this for anything they like. Save those figures they’ve touted, and confront them on it in a live interview in 2023. Market manipulation at its finest. When you can buy the news, you can change the sentiment – even if it means pretending there’s no demand for EVs. Classic GS.
Hisham
Lithium from sea water still intrested