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Delegates at Fastmarkets’ Asian Battery Materials Conference in Singapore, held May 1-3, discussed expectations and developments in the global battery materials markets. Here are four key takeaways.
Sector participants at the conference expected lithium demand to remain strong over the next 10 years, with global battery demand forecast to surge in the years to come.
“Lithium demand should reach 3 million tonnes [per year] of lithium carbonate equivalent [LCE] by 2030, up from 300,000 tpy in 2020,” Daniel Jimenez, partner at iLiMarkets, said during a conference presentation.
Lithium-ion battery demand was forecast to exceed 5,000GWh in 2033, representing a compound annual growth rate of 14% from around 500GWh in 2022, Fastmarkets’ battery raw materials analyst Phoebe O’Hara said at the conference.
Batteries will account for 95% of the global demand for lithium in 2030, with two-thirds of those batteries to be used in electric vehicles (EVs) and one-third in energy story systems (ESS), according to Jimenez.
“[Usage in] EVs will grow from a 12% market share in passenger vehicles in 2022 to approximately 45% by 2030,” Jimenez added. “China and Europe are expected to have the highest EV penetration rates, [both] above 60%.”
The ESS market, meanwhile, was forecast to be the fastest growing battery market.
Fastmarkets has forecast that total battery energy storage system (BESS) capacity will expand to 2,520GWh by 2033, with demand at 480GWh. This growth will be driven by policy incentives affecting BESS installations across Europe, the US and China, O’Hara said.
China will take more than 35% of the BESS market, the US 21% and Europe 18%, she added.
Because of concerns about the growing oversupply in the global nickel market, conference delegates were particularly focused on the role that Indonesia would play in the battery industry, both within Asia and in the West.
In the run-up to the conference, it was revealed that Indonesia was seeking a limited free trade agreement (FTA) with the US to meet the demands of the larger country’s Inflation Reduction Act (IRA).
Although market participants have raised concerns about the sustainability and environmental issues that are often linked with Indonesian nickel production, there was a general consensus that, without Indonesian material, it would be difficult to meet the supply demands of the battery industry.
“Like it or not, we need the nickel,” one trader told Fastmarkets.
At the conference, Septian Haro Seto, a representative of the Indonesian government, told delegates that Indonesia would no longer be providing new licenses for nickel pig iron (NPI) facilities, and that it would be ending the tax benefits for matte producers so as to prioritize the production of mixed hydroxide precipitate (MHP) in the country.
This MHP, according to Seto, would be available to the global industry, not just to China, and he outlined his country’s ambition to balance demand between China and the West.
Most delegates felt that the short-term cobalt market would be persistently bearish because the whole market was still facing challenges concerning surplus supply of cobalt hydroxide raw material and slow demand.
In the Democratic Republic of Congo (DRC), mining company China Molybdenum Co (CMOC) has reached a consensus with state-owned miner Gécamines on royalties, which were at the root of a dispute that led last year to an export ban. Expectations of an oversupply have kept cobalt hydroxide and metal prices depressed.
“Most of CMOC’s surplus is committed [under existing agreements], so this should help to stabilize cobalt hydroxide prices at lower numbers,” a conference delegate told Fastmarkets. “Overall, I think there will be excess cobalt hydroxide inventory for the next two or three years, unless someone steps in to buy it.”
As well as the increasing supply, the unexpected slowness in the nickel–cobalt–manganese (NCM) battery sector and steady growth in the cobalt-free lithium iron phosphate (LFP) market have also curbed the demand for cobalt.
“In the first quarter of 2023, China installed battery capacity of 65.9GWh, up by 28.4% year-on-year,” Ian Liu, head of cobalt purchasing at CNGR Advanced Materials, said in a conference presentation.
“Among these, NCM battery installed capacity was 20.9GWh, taking market share of 31.7%, down from 41.6% in the first quarter of 2022,” he added. “LFP installed capacity reached 44.9GWh with a market share of 68.2%, up from 58.4% in the first quarter of 2022. Rising market shares of LFP in China create slower demand for cobalt.”
Conversations about graphite mainly concerned potential threats to supply, despite the current market weakness, with robust demand expectations and the effects of geopolitical factors such as the IRA legislation in the US.
Delegates exchanged ideas on how to diversify the graphite supply chain away from China, while achieving low-carbon production in line with the global trend toward decarbonization.
“Graphite demand growth over the coming decade will be driven by rapid expansion in the EV and ESS sectors,” William Adams, head of base metals and battery research at Fastmarkets, said.
“In 2022, EV battery production rose by 44% year-on-year to 606GWh, and is forecast to rise at a [compound annual growth rate] of 16% over 2023-33, taking demand to 3,777GWh by 2033,” he added. “With 800-900 tonnes of graphite being consumed per GWh of lithium-ion battery production, the implications for graphite consumption are significant.”
In terms of supply chain integration outside China, industry participants had different ideas, from mining to anode production, with downstream anode producers signing offtake agreements with upstream miners.
But the consensus was that environmental-social-governance (ESG) concerns and carbon footprint controls could be major factors to consider when producing anode materials.
Epsilon, an India-based anode producer, said that it was using a thermal method for the purification and graphitization of anode materials, while Renascor, an Australia-based spherical graphite producer, said that the hydrofluoric acid-free purification process could be an eco-friendly production method. For more information on the current graphite market, take a look at our dedicated page for graphite price insights.
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