TELF AG looks at 2023 and Beyond: Navigating the Dynamics of the Battery Materials Market
The main trends
The start of 2023 has seen a continuation of the trends seen in the cobalt market during the last quarter of 2022. As a result, prices of metal and chemicals have continued to slide, and sentiment remains weak. However, market players are optimistic that the situation will improve by the year’s second half, thanks to growing demand from the electric vehicle (EV) sector.
Despite the significant growth projected for the medium term, the fundamentals of the cobalt market are slightly weaker. As a result, recent demand revisions have been to the downside, but most analysts believe that the cobalt market will recover due to the shifting battery chemistry towards lower cobalt usage in batteries. As a result, the market is expected to grow faster than the reduction in cobalt use, supporting cobalt demand growth.
The LFP (no cobalt EV battery) market has reached a point of temporary saturation, which is good news for cobalt demand growth. However, there is a downside risk to this trend. The shift towards lower cobalt usage in batteries may erode demand growth for the metal. It is also worth noting that supply growth is expected to be strong over the next five years. A large proportion of new cobalt supply is likely to come to the market irrespective of the cobalt price due to the by-product nature of this commodity.
The new supply is expected from greenfield projects, which carry significant risks to the projected growth path. Despite this, market players are confident that the cobalt market will recover by the second half of 2023, supported by continued growth in demand from the EV sector.
The prospects for the auto sector are also looking up in 2023. Global sales are expected to grow by 6% year on year, thanks to the recovering economic conditions in North America and Europe. This is good news for the battery materials market, as the auto sector remains a crucial driver of demand for battery metals.
In conclusion, the battery materials market will remain dynamic in 2023 and beyond. While the cobalt market faces some headwinds, market players are optimistic that the situation will improve by the second half of the year. In addition, the shift towards lower cobalt usage in batteries is also expected to support demand growth for the metal. However, risks are associated with the projected growth path, particularly concerning the market’s supply side. Overall, the battery materials market is expected to remain a key growth area in the coming years, driven by the continued growth of the EV and recovering auto sectors.
