3 Apr, 2023
Battery metal prices ease in Q4 2022 due to sluggish demand
By Eri Silva and Gaurang Dholakia
Prices for graphite, copper and cobalt eased in the fourth quarter of 2022 as soaring lithium prices leveled off, taking some pressure off electric vehicle manufacturers, though nickel prices jumped, according to S&P Global Market Intelligence data.
Metal prices easing
Prices for many battery metals were still up in the fourth quarter of 2022 due to increasing demand for EVs, but there was a shift from previous highs. The monthly average price of US imports of graphite hit $2,667 per metric ton as of Dec. 1, 2022, up by 18.2% year over year but down
The London Metal Exchange (LME) cash price for copper rose to a nearly six-month high of $8,525/t on Dec. 8, 2022, but it was still down by 24.6% compared to a high of $11,300/t on Oct. 18, 2021. Prices pulled back later in December 2022 after the US Federal Reserve Bank announced an interest rate hike.
The monthly average CIF Asia price for lithium carbonate reached a fourth-quarter high of $62,500/t as of the end of November 2022, a whopping 197.6% increase from a high of $21,000/t on Dec. 31, 2021. However, the price leveled off to $62,000/t by Dec. 30, 2022.
Since the third quarter of 2022, cobalt prices have been maintaining a low that had not been seen since September 2021. The LME's three-month cobalt price averaged $51,955/t in the third and fourth quarters of 2022, a 26.3% decline from the high seen in the fourth quarter of 2021, when prices reached $70,500/t at the end of December.
"[Cobalt] prices have fallen back because battery demand has been pretty sluggish. That's largely due to China's zero-COVID policy and a few other factors," Jack Bedder, founder and director of market intelligence provider Project Blue, told S&P Global Commodity Insights earlier in March. "Meanwhile, the market is comfortably supplied in terms of intermediates, metal and chemicals."
The fourth-quarter LME cash price for nickel
Price volatility in the LME remains constant despite a nickel surplus forecast through 2026, according to estimates from Commodity Insights research. "We believe that the disconnect between LME nickel prices and market fundamentals in 2022 has largely resulted from heightened nickel price volatility since the short squeeze on the LME in March [2022]," Jason Sappor, a senior analyst at Commodity Insights, said in a December 2022 report.
Production results mixed
Global lithium production increased 30.2% year over year to 30,463 metric tons in the fourth quarter of 2022, but decreased by 42.4% compared to a six-year high recorded in the third quarter of 2022.
Lithium production totaled 52,924 metric tons in the September 2022 period, the most lithium produced in a quarter, Market Intelligence data shows. During the quarter, lithium producers were supplying Chinese cathode manufacturers amid expectations of an EV buying rush by year-end as consumers took advantage of expiring subsidies, according to Rodney Hooper, partner and lithium analyst at RK Equity Advisors, a research and advisory firm.
Quarter-over-quarter decreases in lithium production are typical at the end of the year due to reduced brine output from China in the winter months, Alice Yu, a senior analyst with Commodity Insights, said in a separate December 2022 report.
Mined nickel production reached a six-year low of 166,731 metric tons in the fourth quarter of 2022, decreasing by 32.2% year over year and by 13.0% quarter over quarter. Mined nickel production totaled 732,724 metric tons in 2022, dropping 21.2% from 2021.
Global production of cobalt reached 13,687 metric tons in the fourth quarter of 2022, increasing by 25.0% year over year but decreasing by 9.6% quarter over quarter.
Global copper production declined to a six-year low of 2.8 million metric tons in the fourth quarter of 2022, dropping 18.4% year over year. Copper output was pressured during the quarter due primarily to community protests that disrupted operations in Latin America.
"Most of the reductions were primarily due to disruptions in Chile and Peru, while production in China was still impacted by COVID-related lockdowns," Ole Hansen, head of commodity strategy at Saxo Bank, told Commodity Insights. "While most of these issues have been resolved it still highlights some of the challenges mining companies may face going forward."
Panjiva is the supply chain research unit of S&P Global Market Intelligence, a division of S&P Global Inc.
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