LONDON : Accelerating sales of electric vehicles have fuelled a scramble for nickel, cobalt and lithium, propelling prices of the battery materials to multi-year highs
Phasing out internal combustion engine (ICE) cars in favour of electric vehicles is part of the energy transition and efforts to cut carbon emissions.
More than 6.36 million electric vehicles were sold last year globally compared with 3.10 million in 2020, data from Rho Motion shows. China accounted for half of the total last year and 40per cent the previous year. (Graphic: Electric vehicle sales – Rho Motion, https://fingfx.thomsonreuters.com/gfx/ce/xmvjojrrdpr/aaper cent20Electricper cent20vehicleper cent20sales.PNG)
NICKEL
Shortages of nickel have led to draws on stocks in London Metal Exchange approved warehouses , which at 88,182 tonnes have dropped 65per cent since April last year.
More pertinent are stocks of bagged briquette, easily crushed into small particles and dissolved in sulphuric acid to make nickel sulphate for batteries, at 65,676 tonnes down 67per cent since last April. (Graphic: LME nickel inventories, https://fingfx.thomsonreuters.com/gfx/ce/zdpxoaxejvx/AAper cent20NICKELper cent20inventories.PNG)
Analysts say most of this briquette has been shipped to China, which controls the electric vehicle supply chain.
Wood Mackenzie analyst Andrew Mitchell estimates total nickel demand at 2.8 million tonnes last year, of which 69per cent was used to make stainless steel and 11per cent to make batteries, from 71per cent and 7per cent respectively in 2020.
Mitchell expects batteries’ share of nickel demand to rise to 13per cent this year. “We are looking at higher average prices this year.”
Nickel hit $24,435 a tonne last week, the highest since August 2011. It is expected to retreat later this year as supplies ramp up. (Graphic: Nickel prices, https://fingfx.thomsonreuters.com/gfx/ce/zjvqkaygwvx/AAper cent20nickelper cent20price.PNG)
Macquarie’s Jim Lennon expects nickel supplies to rise 14.5per cent this year to three million tonnes and a surplus of 43,000 tonnes from a deficit of 159,000 tonnes in 2021.
COBALT
Coronavirus lockdowns in southern Africa created bottlenecks that delayed shipments to China from Democratic Republic of Congo, which accounts for more than 70per cent of global supplies.
“Chinese imports of cobalt hydroxide only increased 2.5per cent to 82,100 tonnes last year from 2020, meaning domestic stocks were drawn down considerably,” said Benchmark Mineral Intelligence (BMI) analyst Caspar Rawles. (Graphic: Cobalt market balances – Benchmark Mineral Intelligence, https://fingfx.thomsonreuters.com/gfx/ce/myvmnjkkepr/aaper cent20cobaltper cent20marketper cent20balances.PNG)
BMI expects total cobalt demand at 177,500 tonnes this year, of which 104,000 tonnes will be consumed by the battery sector.
Cobalt prices at around $70,000 a tonne are at their highest since July 2018. Traders expect further gains as Chinese consumers restock. (Graphic: Cobalt prices, https://fingfx.thomsonreuters.com/gfx/ce/gdvzynmeepw/aaper cent20cobaltper cent20price.PNG)
LITHIUM
Deficits have pushed prices of lithium carbonate to record highs above $50,000 a tonne in China, according to BMI. (Graphic: Lithium prices – Benchmark Mineral Intelligence, https://fingfx.thomsonreuters.com/gfx/ce/xmpjojrndvr/aaper cent20lithiumper cent20prices.PNG)
Lithium carbonate is used for lithium iron phosphate (LFP)batteries. Sales of electric vehicles which use these batteries have accelerated in China.
Lack of investment in capacity due to sliding prices in the three years to 2021 means deficits are likely for some years.
“Supply is struggling to keep up with demand, given long lead times to bring first production from lithium resources to market,” said BMI analyst George Miller.
Electric vehicle batteries can use lithium carbonate or lithium hydroxide. The industry typically talks of lithium carbonate equivalent (LCE) which contains both.
BMI estimates demand for lithium carbonate equivalent at 610,000 tonnes this year, up from 490,000 tonnes last year, and a deficit of 26,000 tonne from a shortfall of 12,000 tonne. (Graphic: Lithium market balance – Benchmark Minderal Intelligence, https://fingfx.thomsonreuters.com/gfx/ce/byvrjxkqmve/AAper cent20lithiumper cent20marketper cent20balance.PNG)
(Reporting by Pratima Desai Editing by Mark Potter)
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