The lithium market is expected to experience a lower price environment, while cobalt prices are expected to be supported by sustained market deficits, research from financial information and analytics provider S&P Global Market Intelligence’s Commodity Briefing Service (CBS) series shows.
The company’s ‘Lithium and Cobalt June 2020’ report indicates that global passenger plug-in vehicle sales will decrease by 7.63% year-on-year to 1.95-million units this year.
Moreover, it says that Covid-19 lowers total plug-in sales and growth in uptake slows in China
Plug-in sales in Europe are expected to increase this year, however, owing to stricter vehicle emissions standards, mitigating the global decline.
Post 2020 EV plug-in sales growth will be driven by policy and lower battery costs, as policy efforts in Europe and China remain favourable to fleet electrification.
The lithium carbonate price has declined by 9.5% this year and the company expects lithium prices to improve in the fourth quarter as more producers announce supply curtailments and as overall automotive sales start to improve following shutdowns to halt the spread of Covid-19.
S&P expects the lithium price to average $8 121/t this year and to decline further in 2021 before recovering to above $8 000/t in 2022. Despite the low price environment, the company expects the balance to remain in surplus until 2025.
The cobalt price, meanwhile, is expected to decline by 4.6% year-on-year to $14.37/lb this year.
S&P expects the cobalt market to be broadly balanced this year as supply reduction from the Mutanda shutdown is offset by the demand reduction owing to Covid-19.
Diversified miner Glencore’s Mutanda mine in the Democratic Republic of Congo suspended operations prematurely in November 2019, owing to a lack of sulphuric acid, which is integral to copper and cobalt extraction.
S&P says cobalt prices will rise and remain above $20/lb from 2022 onwards, to induce and sustain the resumption of Mutanda to meet growing demand.