Is the metal battery gold rush really over? – Steel, aluminum, copper, stainless steel, rare earth and metal prices, forecasts
The term battery metals generally refers to lithium, nickel and cobalt. The name derives from the fact that the three metals are frequently used in the production of all types of modern batteries. Since 2021, these metals have had quite a long bull run. This has proven profitable for investors and provided much-needed predictability for traders.
However, if you ask the experts at Goldman Sachs, the battery metal party is “officially over.” But is it really true? If so, what does this mean for the rest of 2022?
Are Battery Metals Really Made For?
Cobalt saw its last major surge in March 2018, when it hit an all-time high of $94,000 per ton. Although they seemed on the verge of finding that same magic again, cobalt prices are now down from their April highs of $79,000. Lithium, meanwhile, has just started to pull back after hitting nearly $50,000/tonne in March. Even so, they stand pretty high at around $46,000. Nickel prices are hardly determined by technology alone, but they have still spent the past week looking for a solid bottom.
But here’s the thing with Goldman Sachs’ recent proclamation: It’s incredibly early, and it doesn’t quite take into account the facts. If you read any of the articles on the subject, you will notice that the organization has largely based its forecast on supply issues. The absence of a healthy supply chain, they say, will lead to “a multi-year easing trajectory for fundamentals,” triggering a lasting surplus and, consequently, lower prices. And while they make allowances for demand, it’s entirely possible that they aren’t making enough.
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The real supply problem at work is oil
Gas prices are expected to reach $6.00 per gallon in the United States at the start of summer, one of the busiest travel times of the year. And while numbers are still available for 2022, electric vehicle sales grew 85% from 2020 to 2021. You might recognize that was right in the middle of the pandemic.
Now, with the oil spike due to the war in Ukraine and other factors, you can expect more and more Americans (and Europeans) to throw in the towel and go electric. . If that happens, GS’s forecast for electric vehicle demand will fall far short of reality. Of course, the more electric and hybrid vehicles you sell, the more batteries you will need.
Although far from a foregone conclusion, this is a perfectly reasonable scenario. If Russia’s war continues and oil supplies don’t receive a significant boost, we could only envision a “brief pause” in the battery metals gold rush.
One thing is certain: other companies are betting against Goldman Sach’s claims. Just this last Friday. Chevy has reduced the price of the 2023 Bolt model to just $26,595, making it the least expensive electric vehicle in history.
As electric vehicles become more affordable (and more tempting), you’re going to see major changes in several products. What matters now is making sure you’re on the safe side of these moves.
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