Battery raw materials market update March 2025

Key points

1. Chinese lithium market struggles with post-holiday restocking
   Post-Chinese Lunar New Year holiday restocking has failed to meet expectations, owing to slow downstream buying activity, which remained largely flat, and high upstream inventory levels – Fastmarkets estimates that Chinese lithium salt inventories stood at 220 kt tonne of LCE or 20% of annual demand at the end of 2024.
   

2. Bright spots for lithium demand in 2025
   Despite the subdued start to the year with little recovery in salts prices and the increasingly complex geopolitical backdrop, we do see bright spots for lithium demand this year, namely: a rebound in the European EV market, albeit this could be tempered by a relaxation of timescales to meet new CO2 emission targets; the rise of plug-in hybrid vehicles with larger battery packs, widening the addressable geographic market for electric vehicles; and the continued strength of the ESS market, where we are expecting almost 50% year-on-year lithium demand growth.
   

3. Spodumene price standoff pressures lithium supply chain
   The wrangling between spodumene miners and converters continues, with major miners remaining firm on price due to high costs, but converters unwilling to entertain prices above $850 per tonne as their margins become increasingly negative with salt prices drifting lower. If bidding levels drop sufficiently, then miners will have to moderate their price expectations. Longer-term, a persistent disconnect between spodumene and salts prices could prompt changes to contract pricing and influence where strategic investments in the supply chain are made to realize the strongest margins.
   

What do our analysts say?

We are entering a highly uncertain but potentially transformative year for the lithium market – we think prices have broadly bottomed out, the market is rebalancing, and the demand picture appears brighter. But many derailers and tensions exist – EV demand recovery in key markets is far from certain, particularly with the watering down of targets. Rapid restarts of idle capacity could quickly return the market to a larger surplus, negatively impacting sentiment and capping prices. Geopolitical and trade tensions, now extending to lithium-related technologies, are adding further complexity to the outlook.

Paul Lusty, Fastmarkets

Key points

1. DRC imposes four-month cobalt export ban
   The cobalt market has been rocked by the shock announcement of an export ban implemented by the DRC government on February 21. Exports of cobalt hydroxide are to be blocked for 4 months as the government attempts to support prices.
   

2. Cobalt prices surge following DRC export ban
   Prices have reacted in China and the seaborne market – since February 24, when the ban became public knowledge, China metal prices have already risen 27% – while the standard grade cobalt metal has risen 12%.

3. Cobalt supply shortages loom amid export ban
   While there are stocks of cobalt hydroxide and MHP to feed China’s refiners in the short term, the feeling in the market is that these will not be sufficient to cover production through mid-summer.
   

What do our analysts say?

The cobalt market has been quiet and stagnant for some time as production has far outstripped demand in the last 18 months. This was the first sign of life and took nearly all parties by surprise. In the last four months of 2024, the DRC exported 68kt of cobalt as hydroxide to China for refining – a cut of supply this large will likely lead to a significant price correction in the coming months. Post-June, when the ban is supposed to lift, the potential for export quotas going forward could support cobalt hydroxide and metal prices for the remainder of 2025 and into 2026.

Rob Searle, Fastmarkets

Key points

1. Nickel prices hit near-term lows in February
   The LME nickel cash price traded at near-term lows in February, testing the 15,000 per tonne level and closing below this level on two occasions.

2. Nickel prices end higher despite lower monthly average
   Although the LME nickel cash price at the end of February stood 2.8% higher than at the end of January, the monthly average price was 0.7% lower than in January.
   

3. Nickel market balances supply concerns and global developments
   Weighing on the price were reports that Indonesia’s ore quotas might be less restrictive than originally thought, but the price also received some support from a return of risk appetite across markets as the immediate threat of US trade tariffs subsided. Moreover, the Philippines’ senate passed a bill banning nickel ore exports, although this will only be enacted five years hence, giving plenty of time for the market to adjust and capacity to be added in the Philippines. Finally, reports out of Indonesia indicated that PT Gunbuster, one of the country’s larger NPI smelters, was running at reduced capacity because of part-owner Jiangsu Delong’s financial difficulties.
   

What do our analysts say?

The nickel price remains under pressure in early 2025, with the market significantly oversupplied in the past two years. Although reports of an Indonesian NPI smelter operating at reduced capacity might indicate a tightening of supply, our disruption allowance for 2025 more than covers this. Moreover, it is likely that the ore not processed at the Gunbuster smelter will be sold or redirected to other smelters, resulting in little loss of output at the country level. For the nickel price to stage any meaningful recovery will take a lasting change to the market’s fundamentals. That will require either additional supply-side restraint or a stronger-than-expected rise in demand.

Olivier Masson, Fastmarkets

Key points

1. Subdued manganese sulfate prices amid limited buying 
   Manganese sulfate prices have remained subdued in early 2025 with limited spot buying from NCM pCAM producers in China. Small levels of restocking took place in early January, with the market noting limited liquidity pre-holidays.
   

2. Upstream sentiment drives minor gains in manganese prices 
   As the market reopened, there has yet to be a significant improvement in buying from the midstream. Minor gains in manganese sulfate prices have largely been driven by more bullish sentiment upstream in manganese ore markets. Buyers have noted a tightening of availability and lowering stock levels.
   

3. Chinese manganese sulfate utilization drops to 27%
   As expected, manganese sulfate utilisation rates at Chinese processing sites dipped in January, falling to 27%.
   

What do our analysts say?

The quiet manganese sulfate market in early March appears fairly symptomatic of the wider headwinds for NCM demand in 2025. Slower uptake of EVs in the US under the new administration and continuing pain points on EV prices in Europe continue to feed back to slow spot buying for manganese sulfate. Barring any major upstream supply shock like we saw in 2024 in Western Australia, Chinese processors look well set to cover demand in the short to midterm.

Rob Searle, Fastmarkets

Key points

1. Green petroleum coke prices skyrocket by 68%
   In mid-February, green petroleum coke prices skyrocketed by 68%, from $457 (3330 yuan) to $768 (5600 yuan) per tonne. The spread between low sulphur green petroleum coke and green petroleum needle coke narrowed to merely $20 from the traditional $300-$400. Green petroleum coke is a major feedstock in the production of battery anode material and prebaked anodes for aluminium production.
   

2. Supply shortages and policy shifts drive petroleum coke surges 
   The unexpected surge in green petroleum coke prices was driven by concerns of supply shortages due to a significant drop in imported volumes to China from the US in the second half of 2024. Additionally, following changes in policy for the deduction of consumption tax on fuel oil in China, many small and medium-sized refineries went into shutdown and maintenance, with the operating level of refineries in the Shandong province falling below 50%—the lowest in the past 3 years, thus lowering petroleum coke production.
   

3. Spherical graphite prices rise amid petroleum coke surge
   Spherical graphite, made from natural graphite, increased for the first time since March 2022 in reaction from suppliers to the rising prices of green petroleum coke, the main feedstock for synthetic graphite.
   

What do our analysts say?

Increasing petroleum coke prices would add more pressure to Chinese anode makers, who have seen their profit margins eroded over the last year amid overcapacity and severe competition. Depressed anode prices are beginning to take their toll in China, with a court ruling Shanshan, the largest synthetic anode producer, to enter bankruptcy reorganization due to inability to serve its debts to Chinese banks, while several other anode producers slowed down their expansion plans. The anode industry might be heading into a period of consolidation, with a handful of players being able to survive under a low-margin environment and constant technological innovation.

Georgi Georgiev, Fastmarkets

Key points

1. EU’s €100 billion clean industrial deal boosts green manufacturing
   The EU’s €100 billion investment under the Clean Industrial Deal (CID) aims to cut energy costs and accelerate green manufacturing, including battery recycling. This initiative paves the way for Europe to lead the circular economy by 2030.
   

2. Black mass payables rise amid tight supply and completion
   Black mass payables have risen in the last quarter, despite a decline in underlying metal prices, with tight black mass supply and fierce competition in Asian markets driving prices higher. Nickel, cobalt and lithium prices fell by 2.0%, 5.9%, and 8.5%, respectively. Meanwhile, NCM black mass payables increased by 6.6% in Europe, 5.6% in Southeast Asia, and 3.5% in South Korea. In contrast, U.S. NCM payables remained relatively stable, rising by just 0.7%. 

3. Europe’s black mass refining lags far behind China
   By 2025, Europe’s black mass refining capacity will be just 20,000 tonnes—32 times smaller than China’s staggering 650,000 tonnes. This supply chain weakness risks making Europe dependent on foreign processors for critical battery materials.
   

What do our analysts say?

Despite ambitious recycling targets and recent green investment plans, Europe lacks the refining muscle to process its own black mass. Until domestic facilities are built, valuable lithium, nickel, and cobalt materials will continue flowing to South Korea, Southeast Asia, and the US for processing.

Andre Cortesao, Fastmarkets

Key points

1. Strong EV demand in China for 2025
   Consumer sentiment towards EV demand within China remains strong looking at the rest of 2025, following discussions with OEMs at Fastmarkets Battery Raw Materials Shanghai conference. Consensus from participants puts domestic sales growth expectations between 15% and 20% relative to 2024, though exports from the country are expected to stagnate in their % demand growth. 

2. Tariffs on China and Mexico to impact US auto market
   President Trump’s planned tariffs on China and Mexico come into force in early March, and due to the locations of many suppliers within the automotive supply chain, will be swiftly followed by price rises to most automotive products within the U.S. This will understandably affect BEV sales, but it will also affect internal combustion engine vehicles and the wider U.S. economy. How long this will last is questionable, as the economic pain suffered by both parties through imposing tariffs will likely be quite severe, so it will either be continually postponed or retaliatory tariffs will force compromise.
   

3. Norway maintains over 95% EV market penetration
   Norway has reached 94.7% EV sales within its new passenger vehicle industry, slightly below January’s 95.8%, but the trend of a 95%+ EV penetration rate for the year is here to stay within the country.

What do our analysts say?

A strong start to the year for China and Europe is likely to be overshadowed by forecast uncertainty in the U.S., particularly as the effects of tariffs and the extent to which federal subsidies are to be reduced by the new administration shows itself in sales figures.

Connor Watts, Fastmarkets