The metals’ recent performance may appear lacking, but it’s worth looking at a longer time horizon – while lithium has now fallen by about 50% from its peak, prices are still three times higher than when CME Group first launched a lithium contract in May 2021. With an agreement now reached, the stockpiled cobalt will soon be able to enter the market and may put pressure on short-term prices. This was due to a tax dispute with the Congolese authorities. Chinese producer CMOC, which competes with Glencore for the title of the world’s largest producer, has had to stockpile cobalt in the Democratic Republic of Congo (DRC) since last July. In the cobalt market, it is the supply picture that has recently dampened the market mood. They forecast demand to grow from 800,000 metric tons (MT) in 2022 to 3.7m MT globally in 2030. They argue that fundamentals remain strong: producer Albermarle says that continuously high prices will be required to incentivize new production in order to meet burgeoning demand. Lithium bulls are looking past China and at longer-term trends. On the supply side, lithium production is expected to grow in the years to come, with Goldman Sachs calling 33% annual growth from 2022-2025 and Bank of America estimating 38% growth from 2022 to 2023. Further worries about a depressed property sector and overall bearish mood have not helped the local market.
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