Goldman Sachs, battery metals bull market has come to an end, lithium prices expected to fall to more than $16,000 per ton next year.
Investors’ enthusiasm leads to oversupply, “investors are fully aware that battery metals will play an important role in the global economy in the 21st century”
The battery metals bull market has come to an end, and lithium prices are expected to fall next year
Goldman Sachs’prediction
Goldman Sachs Group Inc. said the prices of three major battery metals, cobalt, lithium and nickel, are expected to fall over the next two years, and investors who want exposure related to the green energy transition may add too quickly.
“Investors are fully aware that battery metals will play an important role in the global economy in the 21st century,” Goldman Sachs analysts Nicholas Snowdon and Aditi Rai, among others, said in a May 29 report. “Despite the exponential growth in demand, we believe the current bull market in battery metals is over.”
Goldman Sachs said the long-term prospects for these battery metals remain strong, not because of the rapid adoption of electric vehicles. But investor enthusiasm has led to a supply glut.
“Investor money has poured into supply investments related to the long-term demand for electric vehicles, essentially treating the spot-driven commodity as a longer-term equity trade,” the analysts said. “This fundamental mispricing, in turn, has led to oversupply, far exceeding demand trends,” they noted.
Goldman Sachs said lithium prices are expected to see a “significant correction”, with prices expected to average below $54,000 a ton this year, down from spot prices above $60,000, and fall further to just above $16,000 by 2023.
Cobalt prices could fall to $59,500 next year from an average of about $80,000 a ton currently. Analysts predict nickel prices could rise nearly 20% this year to $36,500 per ton before falling again under “fundamental pressure”.
However, the prices of these metals could surge again after 2024. “The current phase of oversupply will finally set the stage for the battery metals super cycle in the second half of the decade,” Goldman said.
