Wood MacKenzie report25 Oct 2018 09:10
It’s just the beginning for lithium and cobalt
The world is in the first chapter of the electrification story – “a story that has the potential to overhaul the commodities world,” Wood Mackenzie says. But high prices for lithium in recent years have “naturally incentivised a supply response” – and that response has been aggressive. Production in Australia has boomed, and Chinese brine operations are also starting to increase production.“industry majors expect lower prices for [the second half] of 2018, and the rapidly expanding supply base should see prices soften further into 2019,” Wood Mackenzie says. Cobalt surged to a peak of $US95,500/tonne in March, before crashing back down to about $US61,000/tonne – also due to a strong supply response.“With potential mine supply growth of about 28 per cent forecast for next year and only 10 per cent growth in demand, we see the market slipping into a period of latent oversupply that will likely keep cobalt prices subdued over the medium term,” Wood Mackenzie says.But the narrative remains positive for both lithium and cobalt given the rising requirements for EV and energy storage, Wood Mackenzie adds.Analysts at Bloomberg have predicted the world’s lithium battery-making capacity will more than triple from 175 gigawatt hours to 630GwH by 2022.Leading battery metals data provider Benchmark Minerals Intelligence has similar forecasts.Not only is lithium demand is expected to see double-digit growth out to 2025, attempts to minimise the amount of cobalt in batteries are running into technical problems, Wood Mackenzie says.“Indeed, despite the coming wave of supply, the cobalt market will enter a deficit as soon as 2023.”
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