Battery-metals prices are set to retreat from highs this year as surging supplies trigger gluts, a leading Chinese industry group warned.
Nickel prices are likely to drop in the second half as the global market may see a surplus on rising supply led by mines in Indonesia, according to Chen Xuesen, a spokesman for the China Nonferrous Metals Industry Association. Cobalt and lithium carbonate prices may also come off, Chen said, according to a statement on the group’s Wechat account. No estimates were given.
The expected retracement poses a near-term challenge for miners but will be welcomed by automakers, which have struggled in recent years to secure adequate supplies to meet increased demand. The association’s warning echoes a recent forecast from Goldman Sachs Group, which said it was bearish on battery metals including nickel, cobalt and lithium on “surging” production.
Following a 45% rally in 2022, nickel has already slumped 11% on the London Metal Exchange this year, making it the worst performer among the main six metals traded on the exchange. In China, lithium-carbonate prices have also been in retreat, plunging almost 25% from a record in November.
The association — which represents base-metal producers in Asia’s top economy — also warned of a possible surplus in aluminum battery-foil capacity as plants are added. For other metals such as copper and lead, the country is looking to draft policies to cap overall capacity and cut emissions, it said.