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This morning's Australian
Metals investors missing out

Investors who piled into electric-car metals can’t seem to catch a break.

Markets from stocks to crude oil have staged a comeback in 2019 after a tumultuous stretch at the end of last year. But cobalt and lithium — metals that are key to making the rechargeable batteries used in electric vehicles and smartphones — are missing out on the rebound across risky assets.

Cobalt prices have fallen more than 30 per cent in 2019 to their lowest level in two years, according to figures from commodity-price provider Fastmarkets. Meanwhile, a lithium price index published by Benchmark Mineral Intelligence dropped for the 10th consecutive month in January to a multi-year low.

The descent in both markets is a reversal from 2017, when investors sent prices soaring as they anticipated a wave of demand would lead to supply shortages. The slump is the latest sign that once-hot trades can quickly change as major players in a sector shift their behaviour in ways investors can’t predict.

Miners rushed to take advantage of the excitement in battery metals, leading to steady production of the commodities, whichcaused prices to tumble in 2018. Slowing growth in China and uncertainty about the country’s subsidy policies for electricvehicles further hurt sentiment. China is the dominant player in the supply chain for electric-car batteries.

Battery-metals prices have fallen even as global sales of electric vehicles jumped 64 per cent in 2018 from a year earlier, albeit from a low base, according to data tracker EV-Volumes. Both the US and China logged nearly 80 per cent increases in sales growth, although electric vehicles accounted for just 2 per cent and 4 per cent of their markets, respectively. Anxiety about the future rates of adoption and unknowns surrounding battery technology continue to loom over the sector.

Dow Jones Newswires