Goldman Sachs: "Battery Metal Bull Market Is Over... Decline for 2 Years"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Hyunjung] Global investment bank (IB) Goldman Sachs forecasted a decline in prices of cobalt, lithium, and nickel, stating that "the bull market for battery metals is over."

Bloomberg reported on the 29th (local time) that Goldman Sachs analysts Nicholas Snowden and Aditi Rai, in an investment memo, stated, "Prices of the three key battery metals?cobalt, lithium, and nickel?are expected to decline over the next two years."

The analysts said, "Investors are well aware that battery metals will play an important role in the 21st-century global economy," but added, "Despite this exponential increase in demand, we believe the battery metals bull market has currently ended."

Goldman Sachs analyzed that while the long-term demand outlook for metals remains strong due to the popularization of electric vehicles, the heavy investment so far has led to oversupply.

The analysts evaluated, "Investment capital surged due to supply investments related to long-term electric vehicle demand, and metals, which are essentially spot commodities, are being traded like forward-looking stocks," adding, "Fundamentally incorrect pricing has far outpaced demand trends and triggered a massive supply response."

They also predicted that lithium prices, currently over $60,000 per ton, will undergo a sharp correction to $54,000 this year, and further plunge to $16,000 in 2023. Cobalt prices, currently around $80,000 per ton, are expected to fall to $59,500 this year, while nickel prices, at about $36,500 per ton, are projected to rise about 20% before adjusting according to demand.

However, Goldman Sachs expects that from 2024, the development of the renewable energy industry will boost demand for the three battery metals?cobalt, lithium, and nickel?leading to a price rally. Goldman Sachs stated, "The oversupply phase will sow the seeds for a 10-year battery super cycle," and predicted, "Demand will overcome the current supply increase."

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