Battery metals are becoming increasingly scarce as the commodity group remains an integral part of the global electric vehicle (EV) transition. Nickel prices have recently jumped to decade highs amid dwindling global inventories while battery-grade lithium carbonate prices are up roughly 800% from the start of 2021.
Supply crunches are forecast to worsen, but mining companies are expected to push further into battery metal exploration through joint ventures, gaining exposure to the metals group that is projected to see a continued surge in demand in the coming years.
Related ETFs: Amplify Lithium & Battery Technology ETF (BATT), Global X Lithium & Battery Tech ETF (LIT)
Battery Metal Prices Surging on Strong Demand, Lower Inventories
Prices of battery metals, primarily nickel and lithium, have soared over the last year as demand continues to rise and supplies remain worryingly thin.
The global electric vehicle (EV) transition has played a key role in boosting the prices of these metals. According to data from Adamas Intelligence, a record 286.2 gigawatt hours (GWh) of passenger EV battery capacity was deployed onto roads globally last year, a 113% increase compared to 2020.
54% of that battery capacity used high nickel content cathode chemistry, which pushed the amount of nickel deployed in new EVs last December to 19,651 tonnes, up 44% year-over-year and up 29% from the previous month.
Rising demand has stoked fears of nickel shortages which have led to significant draws on LME-registered warehouses. Reuters reports that supplies at these warehouses have fallen to 83,274 tonnes, down 68% from April 2021.
Per Bloomberg, dwindling inventories and a wave of forecasts that supply will fall short of the rapidly growing demand from the EV industry have pushed nickel prices above $25,000 a ton for the first time since 2011. This has created a premium for the cash over the three-month nickel contract of $555 a ton, nearing a 15-year high. Nickel’s price per ton is now up roughly 25% year-to-date.
Further, escalating tensions between Russia and Ukraine are putting upward pressure on nickel market. Russia is a massive producer of the battery metal, and the commodity could become much more expensive with the current conflict between itself and Ukraine becoming an all-out war.
Meanwhile, lithium has also played an increasingly important role in the manufacturing and development of EVs. In December 2021, a record 25,921 tonnes lithium carbonate equivalent (LCE) were deployed onto roads in new EVs globally, up 68% year-over-year and 31% month-over-month. The level of demand for lithium-ion batteries has driven up the price for LCE to all-time highs.
According to analysis from Fastmarkets, highlighted by Mining.com, battery-grade lithium carbonate…
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