Supply and stocks
- Production halts (Mutanda) have caused concern about tightness, but producer stocks are high.
- A slowdown in Chinese demand for electric vehicles (EVs) is likely to lead to less demand for cobalt intermediates and therefore a drop in hydroxide payables.
- But as China is the main processor of cobalt products, some of which are exported, disruptions to exports could create shortages in the supply chain ex-China.
- We expect already weak demand in China to be hit further as demand for NEVs suffers while household and business confidence likely deteriorates in the short term.
- But European original equipment manufacturers (OEMs) relying on lithium battery cells from Asia may suffer supply chain disruptions - this could hit EV manufacturing.
- If prolonged, disruptions will this persuade the EU to delay the introduction of CO2 penalties, penalties that the traditional internal combustion engine OEMs cannot really afford anyway given the depressed auto market.
- Demand for cathode materials from non-Chinese based production likely to pick-up.
- Delivery of shipments to China may be delayed due to port and transport congestion.
- Avoid being dependent on supply chains from one country/region.
- Shorten supply chains and diversify supply chain were possible.
- Should be good news for European battery industry.
This article has been written by our team of analysts at Fastmarkets, who are responsible for providing an independent view on market developments and forecasting their future performance.