Goldman Sachs: bull market for battery metals is over as lithium, nickel, cobalt projects come on stream
- Huge surplus of cobalt, lithium and nickel over the next one or two years will cause prices to trend lower
- Goldman Sachs expects the price of cobalt to drop by a quarter in 2023
The bull market for battery metals – cobalt, lithium and nickel – is over, with their prices expected to drop over the next two years despite rising demand for electric vehicles (EVs), according to Goldman Sachs.
The US bank’s analysts forecast that there will be a huge surplus of the three metals over the next one or two years, causing prices to trend lower, as the investments poured into boosting their output will lead to excess supply.
“With climate change top of mind, investors are fully aware that battery metals will play a crucial role in the 21st-century global economy, just as bulk and base metals did before them,” said analysts including Nicholas Snowdon in a note published on Sunday. “Yet despite this exponential demand profile, we see the battery metals bull market as over for now.”
Powered by the world’s commitment to fight climate change, policy support and a flood of new EV models, the sales of EVs globally continue to rise. According to the International Energy Agency (IEA), sales of EVs – including fully electric and plug-in hybrids – doubled in 2021 to a record 6.6 million units, with more now sold each week than in the whole of 2012.
To reach net-zero emissions by 2050, at least 60 per cent of car sales have to be EVs by 2030, up from 4.3 per cent in 2020, the IEA said.
Goldman Sachs estimated that from 2022 to 2025, the global lithium supply will grow on average by 33 per cent year on year, cobalt by 14 per cent and nickel by 8 per cent against annual demand growth rates of 27 per cent, 11 per cent and 7 per cent, respectively.