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 as global tech giants and automotive leaders race to secure supply chains. This competition has driven up demand and created uncertainty in the market.
According to a report by Wood Mackenzie, a leading research firm, lithium, cobalt, and nickel prices all saw an upward trend at the start of 2018. The analysis suggests that these metal prices are expected to fluctuate over the next five years, playing a growing role in the cost structure of next-generation batteries.
Analysts predict that lithium demand will rise by approximately 42% from 2017 to 2020, which could lead to increased production capacity. However, there remains a lag between expanding raw material output and the actual production of battery-grade materials. As a result, lithium prices are expected to remain high in 2018, but by 2019, supply is likely to outpace demand, causing a decline.
The report forecasts a steady drop in lithium prices, with a compound annual growth rate of -18% for lithium carbonate between 2017 and 2022. Cobalt, on the other hand, has seen more erratic price movements. Its price more than doubled from 2016 to 2017, and in February of this year, it surged 133% year-on-year.
Despite the short-term spike, the report notes that cobalt prices may peak in 2018, then decline over the following two years before stabilizing in 2021 and rising again in 2022. Wood Mackenzie estimates that battery production will account for nearly half of global cobalt demand in 2017, increasing by 61% by 2022.
By 2019, a surplus of cobalt is expected, which could push prices lower. However, regulatory changes in the Democratic Republic of Congo—where 64% of global cobalt is produced—could disrupt this trend. A new mining reform called Farnin aims to increase government revenue by imposing a 50% tax on “excess profits,†potentially leading to higher costs for downstream industries or temporary price hikes.
While the law is still pending approval, the reform highlights the risks associated with the industry’s heavy reliance on Congolese supply. Meanwhile, nickel, though less dominant than cobalt, is also seeing increased demand due to electric vehicle and energy storage growth. Prices hit a record high of $14,125 per ton in February, and analysts expect a decline in 2019 followed by a gradual increase, with 2022 prices nearly doubling those of 2017.
Battery manufacturers are increasingly shifting focus toward nickel and its compounds. As automakers like Volkswagen invest heavily in electric vehicle production, the pressure on raw material supply chains continues to grow. Volkswagen has allocated $25 billion for battery development, aiming to expand its EV production plants from three to sixteen by 2022.
With competitors like Tesla, Volvo, and Renault-Nissan also ramping up their electric car initiatives, the race for battery dominance is intensifying. Wood Mackenzie warns of potential supply bottlenecks, particularly for cobalt, which remains highly concentrated in one region.
As metal prices rise, the long-standing trend of falling battery costs may be disrupted. This has spurred innovation in alternative chemistries and energy storage solutions. Apple, for instance, is negotiating long-term contracts with cobalt miners to secure supply and avoid disruptions caused by the growing demand from electric vehicles.
Shaanxi Xinlong Metal Electro-mechanical Co., Ltd. , https://www.cnxlalloys.com