Battery raw materials market update October 2024

Key points

1. Will recent stimulus encourage more household spending?
   China’s recent stimulus measures are the largest since the pandemic, targeting the housing market, stock market and lending in general. A crucial factor will be whether these initiatives encourage households and the private sector to begin spending again. When combined with the ‘cash for clunkers’ subsidies, there is potential for an increase in spending on durable goods, such as electric vehicles (EVs).

2. Lithium prices on the increase, but for how long?
   So far, this development appears to have driven up lithium prices and spodumene prices. The key question remains whether these price increases will be sustainable.  

3. Price rise seems temporary given modest production cuts
   Given the high levels of inventory and only modest production cuts in China, alongside the ongoing ramp-up of new capacity, it seems likely that the price rise will be temporary. 

What do our analysts say?

The pick-up in lithium and spodumene prices is welcome across the market as no one likes a depressed market, not even consumers, but we expect it will be difficult for prices to rise too far unless there are more production cuts. Indeed, we expect more production cuts.

Will Adams, Fastmarkets

Key points

1. Bearish sentiment in cobalt standard grade market
   In September, cobalt standard grade prices saw a 4.5% decline at the lower end, reflecting the prevailing bearish sentiment in the market.

2. LME Week atmosphere was bullish
   During LME Week, the atmosphere in the base metal and copper markets was distinctly bullish, buoyed by anticipated Federal Reserve rate cuts and China’s stimulus package, which helped support prices. 

3. Copper price forecasts to broaden cobalt intermediates market
   With robust mine production expected to persist in the Democratic Republic of Congo (DRC), forecasts suggest that supported copper prices will further broaden the cobalt intermediates market into Q4 2024.

What do our analysts say?

With supportive measures for copper demand and copper prices we expect to see more of the same in Q4 with cobalt supply outstripping demand. The NCM pCAM market continues to see slow activity, which will likely mean refiners in China continue to produce cobalt metal. This likely means we continue to see elevated export levels into the seaborne market.

Rob Searle, Fastmarkets

Key points

1. LME nickel cash price increase
   In September, the LME nickel cash price increased by 1.1%, as a late rally effectively counterbalanced earlier price declines in the month. 

2. Impacts of macroeconomic uncertainty
   The month began with the LME nickel cash price trending downward, influenced by an uncertain macroeconomic environment that prompted markets to adopt a risk-off stance. 

3. Late rally emerges driven by China’s stimulus
   Nonetheless, a late rally in the LME nickel cash price emerged, driven by the Federal Reserve’s 50 basis point rate cut and further bolstered by China’s stimulus. 

What do our analysts say?

Despite the LME nickel price recovery in late September, the price remains well within the relatively narrow range within which nickel has traded in 2024, apart from a brief peak in May. The market’s fundamentals remain oversupplied in 2024, although we forecast a lower surplus than in 2023. We expect the nickel market to continue rebalancing in 2025 as the announced production cuts bite.

Olivier Masson, Fastmarkets

Key points

1. Prices remain stable with limited spot purchasing activity
   Manganese sulfate prices remained stable in September, with limited spot purchasing activity from China’s NCM pCAM market. 

2. Manganese ore prices drop significantly 
   Manganese ore prices experienced significant declines, dropping 28% month-over-month. The gains seen in ore prices back in April, which previously supported manganese sulfate prices, have largely eroded. 

3. Despite downturn in downstream orders, sulfate processors maintain firm spot offers
   Manganese sulfate processors still active in the market have managed to maintain firm spot offers, despite a downturn in downstream orders. 

What do our analysts say?

Manganese sulfate processors and downstream pCAM producers remain watchful for clear signs of improving downstream demand. The weakness in Western EV markets, particularly evident in Europe, has continued to weigh on demand for battery-grade manganese in September. The outlook is not overly positive heading into Q4.

Rob Searle, Fastmarkets

Key points

1. New tariff on natural graphite imports from China
   The US has decided to impose a 25% tariff on natural graphite imports from China, effective from 2026. In June, a similar 25% tariff was enacted on graphite anodes originating from China. 

2. Sluggish demand from battery sector 
   In September, prices for spherical graphite and fine flake graphite saw a decline due to sluggish demand from the battery sector. 

3. Low industrial activity has minimal impact on petroleum coke prices
   Petroleum coke prices remained stable in September, largely unaffected by the low industrial activity during the Chinese Mid-Autumn Festival. 

What do our analysts say?

The introduction of tariffs on natural graphite from China, in addition to tariffs on graphite anodes, is another step towards the creation of a price premium in the US market for ex-China graphite. However, it remains to be seen how long it will take for sufficient demand to emerge in the US to support a potential price premium, with China being the largest market for graphite plus the anticipated supply growth from new graphite projects in Africa.

Georgi Georgiev, Fastmarkets

Key points

1. Revitalizing Europe’s LFP battery recycling amid economic challenges
   The economic prospects for recycling lithium iron phosphate (LFP) batteries in Europe are currently constrained by low lithium prices and minimal demand for LFP black mass. However, increasing scrap volumes and forthcoming EU regulations are generating renewed interest in this sector. 

2. Challenges in profitability of LFP black mass in Europe
   LFP black mass is less profitable compared to other chemistries, such as NCM, due to its lower recoverable metal values, which are further diminished by declining lithium prices. Additionally, Europe lacks significant avenues for processing LFP black mass, with export options restricted by hazardous waste regulations.

3. LFP share of black mass recycling expected to rise by 2034
   We project that approximately 26% of all black mass produced globally will be of LFP chemistry by 2024, with this share expected to rise to 32% by 2034. 

What do our analysts say?

Although the European LFP battery recycling market faces economic challenges due to low recoverable material value and falling lithium prices, recently at the Congress for Battery Recycling (ICBR) 2024 in Basel, LFP recycling was raised by numerous players showing the interest of the recycling market in this chemistry.

Andre Cortesao, Fastmarkets