Interesting Note about Spot Price9 Aug 2018 05:00
FOCUS: Following the developing international lithium, cobalt markets
Two minor metals have grabbed attention for their value in making batteries for electric vehicles – lithium and cobalt. Metal Bulletin price development manager Jon Mulcahy and battery raw materials team leader Charlotte Radford explore a rapidly evolving market and how market intelligence for the metals is becoming increasingly transparent.
Surging investment across the battery raw materials supply chain, stemming from growing demand for electric vehicles (EVs), including hybrids, has fueled an increasing appetite for transparent market intelligence.
Two of the key components of the batteries commonly used in EVs – lithium and cobalt – are at different stages of market maturity, with greater transparency in cobalt. As an international price reporting agency, Metal Bulletin has recently enhanced its coverage of the battery raw materials supply chain, providing assessments and indices to bring increased clarity to what is a fast evolving and in some cases opaque market.
Lithium
Lithium investors have been flocking to become involved in this sector as prices have surged in recent years. The story is a familiar one: a demand boom catching the industry off guard; supply taking time to respond through expansions and greenfield development; and prices heading one way in the meantime.
In this case it was the rapid increase in EV production that drove the demand surge for lithium – an important component of lithium-ion batteries. The pace of the demand rush was accelerated by China’s subsidy and incentive policies for EV production initiated in 2015, prompting a genuine scramble for lithium, with producers unable to ramp-up supply in such a short space of time.
More recently, Metal Bulletin’s spot price assessment for battery-grade lithium carbonate (min 99.5% Li2CO3), ex works China, has fallen 30% since December amid the availability of cheaper stocks, weaker consumer demand and a four-month transitional period in China toward the adoption of the new EV subsidies, which started in June 12, causing a deceleration in consumption.
Despite the fall in price, the appetite for market intelligence and price references remains as strong as ever. In the growing lithium sector, Metal Bulletin provides valuable insights into the carbonate and fast-developing hydroxide markets. The end uses of lithium remain diverse, although the battery boom has necessitated a distinction in prices between battery-grade and technical-grade material.
Despite the overwhelming majority of lithium supply being covered by long-term contracts, recent years have seen increasing amounts of spot business, particularly in China, where some smaller producers sell up to 50% of their production in the spot market. It is this business that informs Metal Bulletin’s spot price assessments, with trained market reporters in touch with producers, consumers and traders to collect the data used to set a
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