Rapid development of electric vehicles, lithium, cobalt, nickel and other battery materials prices fluctuate
In recent years, the prices of key battery materials like lithium, cobalt, and nickel have experienced significant volatility due to intense competition among global tech companies and automotive giants seeking control over critical resources. This has created a dynamic market landscape that continues to evolve rapidly.
According to a report by WoodMackenzie, a leading research firm in battery raw materials, lithium, cobalt, and nickel prices all surged at the start of 2018. The analysis suggests that these metal prices will continue to fluctuate over the next five years, becoming a more prominent factor in the cost structure of emerging battery technologies.
Analysts predict that lithium demand will grow by approximately 42% from 2017 to 2020, which could lead to an increase in supply. However, there is still a lag between expanding raw material production and the actual availability of battery-grade materials. As a result, lithium prices are expected to remain high in 2018, but by 2019, supply is likely to exceed demand, causing a decline in prices.
The report also forecasts a steady drop in lithium prices, with a compound annual growth rate (CAGR) of -18% for lithium carbonate between 2017 and 2022. In contrast, cobalt prices have shown more erratic behavior. From 2016 to 2017, cobalt prices nearly doubled, and in February of this year, they had risen by 133% compared to the previous year.
Despite the short-term price surge, the report notes that cobalt prices are expected to peak in 2018 at around $70,548 per ton before declining in the following two years. They are projected to stabilize in 2021 and rise again in 2022. WoodMac estimates that battery production will account for 49% of global cobalt demand in 2017, rising to 61% by 2022.
Congo remains a major supplier, providing 64% of the world’s cobalt last year. Recent mining reforms, such as the Farnin bill, have introduced new taxes on "excess profits," potentially increasing revenue for the country but creating uncertainty for downstream industries. Although the law is not yet finalized, it highlights the risks associated with the industry's reliance on Congolese supply.
Nickel, though less dominant than cobalt, is also seeing increased demand from the battery sector. WoodMac predicts that demand for nickel will more than double between 2016 and 2020, driven by electric vehicles and energy storage systems. Nickel prices hit a new high of $14,125 per ton in February, and while analysts expect a decline in 2019, prices are forecasted to rise steadily thereafter, reaching almost double the 2017 level by 2022.
As demand grows, some Western producers are shifting their focus toward battery-grade materials and sulfates. The expansion of the EV and energy storage markets has already begun to reshape the metals industry, and this trend is expected to intensify as major automakers ramp up production.
Volkswagen, for example, has committed $25 billion to battery development and production, aiming to expand its electric vehicle manufacturing plants from three to sixteen by 2022. It plans to source batteries from LG, Samsung, and Chinese manufacturer CATL. With competitors like Tesla, Volvo, and Renault-Nissan also investing heavily, the race for dominance in the EV space is heating up.
WoodMackenzie warns of potential supply bottlenecks, particularly the heavy reliance on Congolese cobalt. Rising metal prices may slow the long-standing trend of falling battery costs, prompting innovation in alternative chemistries and energy storage solutions.
Apple, which relies on cobalt for iPhone batteries, has started negotiating long-term contracts with miners to secure supply and avoid disruptions caused by the growing demand from electric vehicles. As the battery industry continues to evolve, securing stable and sustainable sources of critical materials will become even more crucial.
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