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Prices of battery metals are about to start declining later this year, the China Nonferrous Metals Industry Association has forecast, citing a surge in supply.
Nickel is one of the metals that may well sell for less in the second half of the year, driven by rising supply from Indonesia, a spokesman for the Association said as quoted by Bloomberg.
There is also a downward risk for lithium carbonate and cobalt prices, Chen Xuesen also said, citing Goldman Sachs’ recent update on battery metals, in which the investment bank’s analysts said they were now bearish on these but bullish on basic metals such as copper.
Bloomberg earlier this month reported that cobalt prices had shed more than 50 percent since May 2022 because of a drop in demand from the Chinese electronics sector.
Lithium, while also down considerably, is still trading at a high price, limiting EV makers’ opportunities to make their cars more affordable in order to attract more buyers.
Since the start of 2021, lithium prices have soared tenfold to $80,000 per ton with the danger of shortages playing a big part in price formation.
The news would be good for EV makers, which have been struggling to keep their cars relatively affordable while raw material prices soar, but bad news for miners. These are already reluctant to invest in new mine capacity, which threatens the future security of EV raw material supply and has become the cause of many apocalyptic shortage forecasts.
The International Monetary Fund, for instance, forecast two years ago that demand for metals and minerals as part of the energy transition might exceed the current level of supply, noting that expanding mining operations would be a challenge.
Separately, the World Bank estimated last year that the transition would require mining investments to the tune of $1.7 trillion in order for supply to be able to match the demand for metals and minerals.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.