(Bloomberg) – Goldman Sachs Group Inc. he said the price of three key metals in batteries (cobalt, lithium and nickel) will go down over the next two years after investors want to expose themselves to the transition to green energy accumulating too quickly.
“Investors are fully aware that battery metals will play a crucial role in the global economy of the 21st century,” Goldman analysts, including Nicholas Snowdon and Aditi Rai, said in a note on Sunday. “Still, despite this exponential demand profile, we see that the bullish market for battery metals is over for the time being.”
The long-term outlook for metals remains strong, mainly due to the rapid adoption of electric vehicles, according to Goldman. But the exuberance of investors has led to oversupply.
There has been “an increase in investor capital in supply-side investment linked to the long-term demand for electric vehicle demand, essentially trading a cash-driven commodity as a future equity,” analysts said. “This fundamental bad price has, in turn, generated a disproportionate supply response well ahead of the demand trend.”
There will be a “strong correction” in lithium prices, with an average of metal below $ 54,000 per tonne this year, below a spot price of more than $ 60,000. It will fall even further to an average of just over $ 16,000 in 2023, the Wall Street Bank said.
Cobalt is likely to drop to an average of $ 59,500 a tonne next year from the current $ 80,000. Nickel is likely to rise nearly 20 percent for the rest of this year to $ 36,500 a tonne before “key pressures” drop again, analysts predict.
However, prices could skyrocket after 2024.
“This phase of oversupply will finally sow the seeds of the supercycle of battery materials during the second half of this decade,” the bank said. Then, “rising demand will more sustainably outpace current supply growth.”
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