Mines: good prospects for cobalt, nickel and lithium prices following the boom in electric vehicles
Battery metals are expected to rebound this year as the electric vehicle boom is supported by the post-pandemic push for a green economic recovery.
Another positive wind for lithium, cobalt and nickel comes as further stimulus is expected to fuel inflation, boosting demand for durable assets like commodities. The dollar’s reflation and weak trade mean it’s not just an electric vehicle (EV) story anymore, according to Trafigura, the world’s second-largest metals trader.
BloombergNEF predicts tight markets for lithium, battery grade nickel and cobalt to drive prices higher this year, but not at levels seen in 2018.
The interim lithium key battery ingredients rally could continue as demand strengthens, with storage along the EV China supply chain, according to Citigroup Inc. The soft silvery-white metal is expected to be a “clear winner,” a said David Merriam, director of electric vehicles and battery research at raw materials consultancy Roskill.
“All battery technologies benefit the demand for lithium,” he said. “A tight supply of battery-grade lithium compounds is also expected to lead to a strong recovery in contract prices, accelerating towards the end of 2021.”
Cobalt rebound
A market deficit could see cobalt extend its gains over the past six weeks. Shipments from the Democratic Republic of the Congo via South African ports risk being disrupted by a resurgence of Covid-19.
Cobalt is also expected to benefit from a rebound in the aerospace sector, where the metal is used in jet engine alloys, according to Stephen Gill, managing partner of Pala Investments Ltd., a mining investment firm. The industry has been hammered after the pandemic curbed overseas travel.
“We’re at an inflection point in cobalt, which is going to continue to move quickly when we see aerospace and electric vehicles firing at full capacity,” said Gill.
Nickel back Le
Nickel has jumped more than 60% from the March low, as its long-term importance to the battery industry is complemented by demand from the stainless steel industry. Tesla Inc. CEO Elon Musk has said the metal will play a bigger role in the company’s batteries and has pleaded with miners to produce more.
“We have seen a lot of investment in nickel due to the growing importance of the battery sector,” said Khodov of Trafigura. “We are looking at a very large deficit in the long term. “
Yet in the short term, the BNEF sees a price correction as the market rebalances this year.
