Battery metals market faces perfect storm — analysts

The Trump Administration’s newly announced US import tariffs could dramatically reshape the American automotive and electric vehicle (EV) industries, compounding existing pressures in the battery raw materials (BRM) market, analysts at Fastmarkets warned Friday.The lithium market, in particular, remains under significant strain amid global economic uncertainty, sluggish demand, and persistently low prices. “The market outlook remains bearish, with weak downstream buying activity and little improvement in lithium demand expected in April. Even energy storage battery producers are slashing lithium orders,” Fastmarkets said in the report.Despite a promising rebound in EV sales in Europe during the first quarter, lithium demand in the region remains soft. Chinese spot markets for spodumene continue to slide, driven by prolonged weakness in lithium pricing. Australian miners have lowered their offer levels in response, but a wide gap persists between miner and converter price expectations, the analysts said.“Any hopes for battery demand recovery this year could be easily derailed by higher vehicle prices, inflationary pressures, and disrupted supply chains”Paul Lusty, head of battery raw materials research, FastmarketsWhile demand for lithium hydroxide remains weak, seaborne prices trended higher in March as producers maintained firm offers, citing elevated production costs, the report shows. Notably, in late March, lithium hydroxide regained a premium over carbonate on a CIF China-Japan-Korea basis. Though the shift was short-lived, Fastmarket analysts expect a long-term convergence of the two prices, with hydroxide potentially regaining a sustained premium.Paul Lusty, head of battery raw materials research, noted the broader macroeconomic risks looming over the sector. “Recent tariffs announced by the Trump Administration have sent shockwaves through global markets, igniting fears of a slowdown and potential recession. Any hopes for battery demand recovery this year could be easily derailed by higher vehicle prices, inflationary pressures, and disrupted supply chains,” he said.“This spells ongoing challenges for lithium producers who have been struggling with steeply declining prices throughout most of 2024, cutting costs and production in the hope of a meaningful and sustained supply-side response,” Lusty said.Export restrictionsThe cobalt market has also been shaken by a surprise export ban from the Democratic Republic of Congo (DRC), sparking the most bullish price rally seen since 2022. While prices partially retreated mid-month, the market remains volatile. “If the DRC government wanted to flex its muscles and show miners and refiners who really controls global cobalt reserves, it would appear they’ve succeeded for now,” said Fastmarkets analyst Rob Searle. “Negotiations are understood to be ongoing, but if the latest announcement — that the government could extend the ban — is anything to go by, we’re no closer to knowing what happens at the end of June.”In the nickel sector, export restrictions and oversupply are pulling prices in opposite directions. A brief rally in the London Metal Exchange (LME) nickel cash price above $16,000 per tonne faded quickly, ending the month up just 1.6%. New data from the International Nickel Study Group confirmed a significant oversupply in early 2025. “For the nickel price to stage a meaningful and sustainable rally, supply discipline will be required—including from Indonesian producers,” said Olivier Masson, principal analyst at Fastmarkets.Meanwhile, a sweeping 25% US tariff on imported vehicles and components, effective April 2, is poised to hit domestic automotive sales hard. The policy triggered a short-lived consumer rush ahead of the deadline, but Fastmarket analysts anticipate a sharp sales drop in the months to come, driven by higher prices and eroded OEM profit margins.“The Detroit Three (GM, Ford and Chrysler) are particularly vulnerable, given their reliance on supply chains centred in Mexico and Canada,” said Fastmarkets’ Connor Watts. “Further tariff-driven inflation in the US will have a significant negative impact on automotive purchases and the EV industry if maintained. Of the major US players, Tesla appears to be the biggest winner under the current tariff regime.”The report concludes that as demand dynamics shift globally and policy risks mount, the BRM sector will continue navigating a turbulent landscape.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com