Goldman Sachs: Battery metal prices to fall in next two years

Prices of three key battery metals — cobalt, lithium and nickel — will fall over the next two years as investors flock to green energy, Goldman Sachs Group Inc. said.

Goldman Sachs analysts including Nicholas Snowdon and Aditi Rai said in a May 29 report, “Investors are fully aware that battery metals will play a key role in the global economy in the 21st century, however, despite the exponential growth in demand, But we think the bull market in battery metals is over for now.”

Goldman Sachs said the long-term outlook for the battery metal remained strong, especially thanks to the rapid adoption ofelectric vehicles, but the "enthusiasm" of investors had led to a supply glut."Investors' capital poured into supply investments tied to long-term demand for electric vehicles, essentially trading the spot-driven commodity as a forward-looking stock," the analyst said, "which in turn has resulted in a well-outpaced demand. Huge supply of trends.”

Image credit: Tesla

Goldman Sachs said there will be a "significant correction" in lithium prices, which will average below $54,000 a tonne this year and below the spot price of more than $60,000.The average price of lithium will fall further to just over $16,000 in 2023.The average price of cobalt is likely to fall to $59,500 a tonne next year, from around $80,000 a ton currently.Analysts alsoforecastnickel prices could rise nearly 20% to $36,500 a tonne for the rest of the year before “fundamental pressures” push the price down again.

After 2024, however, the price of the battery metal could surge again.Goldman believes that “oversupply at this stage could eventually lead to a supercycle of battery materials between 2025 and 2030, after which a surge in demand would more sustainably offset current supply growth.”