NCM batteries expected to keep largest EV market share: Cobalt Congress 2023

This is according to analysts who took part in a panel discussion at the Cobalt Institute’s Cobalt Congress in Istanbul on May 10.

According to Fastmarkets’ battery raw materials analyst Robert Searle, who was one of the panelists, there is a firming demand for nickel cobalt manganese (NCM) in the second half of the year from the EV industry that will prompt cobalt sulfate prices to increase, despite the growth of LFP demand in China and the West.

Sales of EVs containing NCM batteries should reach 19.5 million units in 2030, Searle said.

Fastmarkets’ research forecasts the EV industry will account for 47% of the total demand for cobalt by 2030.

“LFP is taking more [market] share from NCM batteries, but NCM is expected to remain the dominant market share. But there is also a possibility for reduced cobalt content within the batteries,” Searle said.

Cobalt’s high and volatile prices as well as ESG risks have led car manufacturers to work toward reducing the amount of the metal used in NCM batteries.

This trend, however, would not affect the NCM market share because the batteries would still contain cobalt, albeit at a reduced amount, Searle said.

“There will always be a risk of [NCM] being replaced by a different chemistry, but we still see cobalt as a key component for batteries. Cobalt is important for safety and stability of the chemistries in the battery,” a panelist from another price reporting agency said.

All analysts in the panel stressed that LFP and higher nickel-content batteries are gaining more market share in China than in the rest of the world because it is a cheaper and safer alternative that provides a longer charging life in comparison with lithium-ion batteries.

“But China will want to export more EVs to the rest of the world, [so] they will need more NCM batteries, too,” a second panelist from another PRA said.

Cobalt prices have been softening recently mainly due to weak demand from the chemical market and an oversupply of cobalt hydroxide.

Fastmarkets’ cobalt hydroxide payable indicator, min 30% Co, cif China, % payable of Fastmarkets’ standard-grade cobalt price (low-end) was assessed at 51-53% on Wednesday May 12, down from 58-61% on January 4. It stood at 83-86% on May 11, 2022, during last year’s Cobalt Congress.

Fastmarkets’ research forecasts cobalt will reach an oversupply of 4,000 tonnes in 2023, with the surplus increasing to 14,000 tonnes in 2024.

Searle also emphasized that the expected return of China Molybdenum Co (CMOC)’s Tenke Fungurume operation in the second half of the year and major brown and greenfield expansions will continue to pressure cobalt hydroxide payables and prices in 2023.

“The surplus expected in the cobalt market [will be seen] only in the short term, and it is unlikely to last for too long as production and demand recovers,” Searle said.

“There are production cuts [totalling] at least 16,000 tonnes already announced this year from various mines, including artisanal mining. [The] supply side will slowly affect the cobalt market,” a market participant attending the conference said.

“It’s a tough market at the moment but I think cobalt is to stay in the EV battery,” another conference attendee said.

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