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“Get used to deglobalization,” Wood McKenzie’s vice-chairman metals & mining, Julian Kettle, said at the LME Metals Seminar on Monday October 24, “[because that] is how we will deliver the energy transition – rather than globalization.”
Kettle was speaking in a panel discussion entitled “Spotlight on China policy and its impact on metals”, with other panelists including the head of commodity markets strategy at Bank of China International, Amelia Xiao Fu, along with Asia commodities and energy columnist at Thomson Reuters, Clyde Russell, and managing director and chief China economist at ICBC Standard, Jinny Yang.
Delegates heard how Western economies have been increasingly moving to deglobalize the lithium-ion battery supply chain to reduce their over-reliance on certain countries – namely China – and improve the sustainability of the industry.
And they were told that supplies of lithium, alongside other key battery materials such as cobalt and nickel, have been tight in recent years and struggling to keep up with the surge in demand as the world pushes for electrification.
“If we think about the long term, what we’d like to see [is how] well China [can manage to] maintain its dominance during the energy transition,” Kettle said. “So far, [the western economies] have done too little, too late. [And,] over the next 10 years, China will maintain its dominance in the global supply chain if investment [by western countries] is not put in place.”
He said that, unlike the West, “China has already gone out and secured its supply chains [for lithium-ion batteries]. It has already secured its nickel and cobalt supplies [and is] starting to look at lithium investments.
And Clyde Russell pointed to the potential problems thrown up by China’s position with regard to Russia’s unprovoked invasion of Ukraine.
“We still have to see the full ramifications of Russia’s invasion of Ukraine [and] how this affects the relationship between Western economies and China,” he said.
“Right now, the Russia situation has really undermined… confidence in doing business with China,” he said.
In the meantime, tight global supplies have seen lithium prices reached record highs.
Fastmarkets’ price assessment for lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea stood at $78-80 per kg on Monday October 24, narrowing up 1.28% from $76-80 per kg on October 21.
The price was $39-41 per kg at the beginning of the year.
Market participants generally agree that the structural deficit in supply and the rapid growth in demand that have supported the jump in prices so far this year are likely to remain in place in the coming years as the market for electric vehicles expands.
And the Fastmarkets research team also think the deficit is going to be here for some time.