Lithium and Cobalt - Softer demand weighs on prices

The monthly increase in the lithium carbonate CIF Asia price slowed to 6.7% month over month in March, compared with 48.3% in February. The London Metal Exchange's cobalt cash price edged 0.1% lower month-to-April 22.

* Passenger plug-in electric vehicle, or PEV, sales for the remainder of the year face strong headwinds from production-side losses due to the latest wave of COVID-19 lockdowns in China, the ongoing computer chip shortage and repercussions on the automotive supply chain from the Russia-Ukraine conflict.

* We have therefore downgraded our 2022 passenger PEV sales estimate by 149,166 units globally, including 92,674 units in China.

* Chinese lithium demand has also been weakened by consumption pullbacks across end-use segments due to high prices and the production losses, while supply is relatively strong.

* We now expect a lithium market surplus of 6,426 tonnes of LCE in 2022, instead of the 4,296-tonne deficit in our previous report.

* Despite weaker cobalt demand, the cobalt price correction has been muted due to further challenges from Africa's export logistics. Severe flooding disrupted operations at Durban port for 36 hours before partially resuming April 13.

* We have increased our cobalt price forecast by $0.22/lb to $32.09/lb in 2022 on the dominant impact of persistent challenges at Durban port and its auxiliary infrastructure.

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