Goldman Sachs Group Inc. said theprice of three key battery metals -- cobalt, lithium and nickel -- will dropover the next two years after investors wanting exposure to the green-energytransition piled in too quickly.
“Investorsare fully aware that battery metals will play a crucial role in the 21stcentury global economy,” Goldman analysts including Nicholas Snowdon and AditiRai said in a note on Sunday. “Yet despite this exponential demand profile, wesee the battery metals bull market as over for now.”
The longterm prospects for the metals remain strong, not least because of the rapidadoption of electric vehicles, according to Goldman. But investor exuberancehas led to an oversupply.
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There’sbeen “a surge in investor capital into supply investment tied to the long termEV demand story, essentially trading a spot driven commodity as aforward-looking equity,” the analysts said. “That fundamental mispricing has inturn generated an outsized supply response well ahead of the demand trend.”
Therewill be a “sharp correction” in lithium prices, with the metal averaging under$54,000 a ton this year, down from a spot price of over $60,000. It will fallfurther to an average of just over $16,000 in 2023, the Wall Street bank said.
Cobaltwill probably drop to an average of $59,500 a ton next year from roughly$80,000 now. Nickel is likely to rise almost 20% over the rest of this year to$36,500 a ton before “fundamental pressures” drive it lower again, the analystsforecast.
Still,prices could soar again after 2024.
“This phase of oversupply willultimately sow the seeds of the battery materials super cycle over the secondhalf of this decade,” the bank said. Then, “the demand surge will moresustainably overcome current supply growth.”
