"Battery's 3 Major Metal Prices Expected to Decline Over the Next 2 Years" (Comprehensive)

Surge in Capital Inflow Due to Increased Investment Demand
Nickel Down 16%, Cobalt Down 8.7%
International Oil Prices Also Expected to Decline in Second Half

[Image source=Reuters Yonhap News]

[Asia Economy Reporters Kim Hyun-jung, Ji Yeon-jin, Kim Jin-ho] Prices of certain raw materials that soared due to supply chain disruptions triggered by the COVID-19 pandemic and the impact of the Ukraine war are expected to turn downward.

On the 29th (local time), Bloomberg reported that the sharp increase in capital inflow is due to a surge in investment demand for the three major battery metals?cobalt, lithium, and nickel?and forecasted that prices will decline over the next two years. Goldman Sachs analyzed that although the long-term demand outlook for metals remains strong as electric vehicles become widespread, the concentrated investment so far has led to oversupply.

Analysts stated, "Investment capital has surged due to long-term supply investments related to 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, causing a massive supply response."

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

In fact, prices of key metals used in electric vehicle batteries have been declining since the beginning of this month. According to a report published by Samsung Securities on the same day, nickel has plummeted more than 16% this month alone. Compared to the yearly high, it has dropped 35.9%. Cobalt fell 8.7% compared to a month ago, and lithium carbonate also declined by 5.3%.

Accordingly, the financial investment industry expects that the value of domestic electric vehicle battery companies will inevitably be impacted. Jung Jong-hoon, a researcher at Samsung Securities, said, "The price effects caused by Russia's invasion of Ukraine in March, which had driven metal prices up, concerns over production disruptions due to China's city lockdowns, and margin calls from failed nickel futures sales are now fading," adding, "It is currently difficult to determine whether the downward trend in metal prices will continue, but if the price decline persists for some time, material companies whose metal prices and selling prices are linked will need to consider the impact of falling selling prices, unlike the first quarter when they experienced significant earnings improvements."

There is also analysis that international oil prices, which had been hitting new highs daily due to Russia's invasion of Ukraine, will turn downward from the second half of the year. According to the 'Recent Trade Balance Deficit Assessment and Outlook' report released on the 30th by the Korea International Trade Association’s International Trade and Commerce Research Institute, the recent deterioration in trade balances is a common phenomenon among manufacturing export countries such as Germany, Japan, and China, and trade deficits are expected to gradually improve along with falling oil prices in the second half.

Hong Ji-sang, a research fellow at the Korea International Trade Association’s International Trade and Commerce Research Institute, said, "We expect a gradual decline in oil prices from the second half," adding, "From June, Saudi Arabia’s crude oil will be introduced at a better official selling price, and the trade balance will quickly return to normal."

This content was produced with the assistance of AI translation services.