ARKANSAS, January 22 (Future Headlines)- Rethink Energy, a leading research firm, recently released a comprehensive report delving into the battery raw material supply chains up to the year 2030. This in-depth analysis not only examines the current state of raw material prices but also explores their potential impact on future supply, addressing the crucial question of whether the current supply can meet the rising demand. The report further investigates battery cell prices and how they are expected to continue their downward trend amid increasing demand.
A notable shift in the discussion surrounds lithium, as its significant price drop since 2022 has altered the dynamics of battery raw materials. Previously, lithium was the primary focus for cathode and battery manufacturers seeking provenance-based subsidies. However, the substantial decline in lithium prices has reshaped the narrative, opening up opportunities for other options and considerations.
Nickel has emerged as a pivotal factor for manufacturers of high-nickel ternary batteries since October. This shift is anticipated to persist until 2026 when the lithium supply and demand equilibrium is projected to become more delicate. The subdued outlook for lithium prices is expected to persist, fueled by robust supply from sustained spodumene production and prevailing negative sentiment regarding future supply conditions.
Interestingly, lithium remains the most crucial price component for producers of lithium phosphate batteries. This divergence in importance underscores the varied preferences among companies based on their desired chemistries, creating a nuanced industry split that is also influenced by regional factors.
In 2023, there was a notable rebound in lithium-ion battery pack prices, decreasing from $151/kWh to $139/kWh year-over-year. The drop in lithium salt prices was attributed to oversupply in the market, driven by excess inventory from Chinese converters. High inventories are expected to keep lithium salt prices subdued for the foreseeable future, with potential extensions if supply continues to expand.
However, as brownfield lithium projects approach maximum capacity, the reliance on greenfield projects becomes imperative for sustained expansion. The low-price environment poses additional risks to the future supply landscape, with potential impacts on prices from 2026/2027 onward. Despite the continued fall in pack prices until around 2026, concerns arise regarding potential government intervention through tariffs to artificially maintain high prices.
The European Union is identified as particularly vulnerable to such intervention, considering its ongoing reliance on Chinese supply and the region’s high energy costs resulting from the Russia-Ukraine war. Policy is expected to play a pivotal role, with the US Inflation Reduction Act creating parallel markets for high-cost chemicals like lithium salts and nickel sulfate.
Companies are likely to find value in maintaining simple supply chains through strategic choices in battery chemistry. This simplicity not only enhances competitiveness and profitability but also facilitates eligibility for Inflation Reduction Act subsidies. The report emphasizes the significance of technological and chemical advancements, considering improvements in energy densities without proportional long-term cost implications.
The analysis goes beyond statistical considerations, incorporating forward-looking statements in the context of evolving supply and demand dynamics. Additionally, insights from industry figures and stakeholders provide a more nuanced understanding of industry sentiment and potential policy changes from relevant governments. As the world navigates the intricate landscape of battery raw materials, this report offers a comprehensive roadmap, shedding light on critical factors that will shape the future of the industry up to 2030.
Reporting by Alireza Sabet; Editing by Sarah White