At the Li-ion Battery Americas 2024 Agenda hosted by SMM in Las Vegas, USA, Wang Cong, General Manager of the New Energy Division of SMM Industry Research Institute, gave an outlook on the development of the lithium-ion battery critical metals industry. She said that SMM expects that from 2024 to 2026, there will be a surplus of global lithium resources, and the surplus will shrink year by year. In terms of battery-grade lithium carbonate price trends, from 2023 to 2025, SMM expects that with the slowdown in the marginal growth rate of electric vehicle and energy storage market demand, coupled with the concentrated release of upstream lithium resource projects, the lithium market will turn from a mismatch between supply and demand in 2022 to a surplus, dragging down the price of lithium carbonate to continue to decline; entering 2026, SMM expects that the future prosperity of the energy storage market may drive demand growth, and in the context of long-term oversupply, resource expansion will continue to slow down, and the market surplus may be eased in the future。
With the slowdown in the growth of the new energy market, the cost and performance competition of lithium batteries has intensified
The new energy market maintained growth, but the growth rate gradually slowed down
According to SMM's review and outlook of global energy vehicle sales from 2019 to 2027, it is known that from 2019 to 2022, the compound annual growth rate of global new energy vehicle sales will be about 70%, and from 2022 to 2025, the value may reach about 22%, and from 2025 to 2027, although SMM expects the global new energy vehicle market to maintain a growth trend, the compound annual growth rate may drop to about 9%.
When it comes to the key growth points of new energy vehicles in various countries, China's main reason is that the subsidy policy has promoted the rapid increase in the penetration rate of new energy vehicles, and there is little room for further improvement in orders, while the increase in the penetration rate of new energy vehicles in North America is mainly driven by the IRA policy, and it is expected that there is still a lot of room for expansion in the future, and in Europe, it is mainly driven by the ban on the sale of fuel vehicles and the energy transition.
In terms of energy storage demand, SMM understands that from 2019 to 2021, the compound annual growth rate of global energy storage demand will remain at about 49%, from 2021 to 2024, it is expected that the global energy storage demand will still maintain a growth rate of 49%, and from 2024 to 2027, SMM expects the compound annual growth rate of global energy storage demand to remain at about 29%, although the growth rate is slowing down, but it still maintains a year-on-year growth trend.
The growth of energy storage in China is driven by mandatory targets and subsidies, while in North America it is mainly driven by mature markets and ITC policies, and in Europe, the growth of energy storage is driven by policy subsidies and energy transition.
The difference in cost and performance of different batteries directly affects the proportion of batteries used
At present, the mainstream batteries are mainly divided into ternary batteries and lithium iron phosphate batteries, compared with the two, ternary batteries have higher energy density and low temperature performance, while lithium iron phosphate batteries have more cost advantages and high safety performance.
In recent years, lithium iron phosphate batteries have continued to squeeze the market share of ternary batteries, and it is expected that the market demand share of ternary batteries will be partially replaced by lithium iron phosphate batteries.
The following figure shows the cost trend comparison of 523 ternary cells and lithium iron phosphate cells:
It can be seen that since 2021, with the sharp rise in the price of battery raw materials, the cost of battery cells has also continued to rise. However, with the continuous decline in the price of lithium salts such as lithium carbonate, the main raw material for batteries, since 2023, the cost of battery cells has dropped by more than 50%. Taking the 523 ternary battery as an example, its cost has dropped from 1.1 yuan/wh at the beginning of 2022 to 0.5 yuan/wh this year.
As the competition in the auto market becomes increasingly fierce, many automakers find it difficult to survive in the fierce market competition, so they prefer to choose lower-cost batteries.
The downward trend in cobalt sulfate prices has enhanced the cost advantage of medium nickel NCM, and the use of medium nickel and high nickel cathodes has increased
Since the second quarter of 2022, the price of cobalt sulfate has continued to decline, the cost of medium nickel ternary batteries has also declined, and the use of medium nickel and high nickel cathodes has gradually increased.
Driven by cost advantages and energy storage demand, the demand proportion of lithium iron phosphate batteries continues to increase
When it comes to the outlook for global lithium battery demand, SMM predicts that the global energy storage industry's demand for lithium batteries will account for about 17% in 2023, which is expected to increase to about 18% in 2024, and is expected to account for about 22% in 2027, while the demand for lithium batteries in the electric vehicle industry will be about 71%, and the compound annual growth rate of lithium-ion battery demand from 2023 to 2027 may be around 23%.
According to the type of lithium battery, the demand for lithium iron phosphate batteries will account for about 55% of the total demand in 2023, and it is expected that by 2027, this data will grow to about 64%, and the proportion of demand will continue to increase.
The uncertainty of lithium battery demand amplifies the volatility of battery raw material prices
The sharp decline in lithium carbonate prices has brought about a significant decline in the cost of lithium iron phosphate batteries
The following figure shows the price trend of battery-grade lithium carbonate and lithium iron phosphate energy storage batteries, from which it can be seen that with the sharp decline in lithium carbonate prices, the price of lithium iron phosphate batteries has also decreased, and in terms of cost, the cost of lithium iron phosphate batteries in January 2024 is about 0.4 yuan/Wh, a decrease of 52% compared with 0.8 yuan/Wh in January 2023.
Global lithium resources are expected to be in surplus from 2024 to 2026, and the price range of lithium carbonate is expected to be under pressure
According to the balance of global lithium resource supply and demand from 2020 to 2026 compiled by SMM, SMM expects that from 2024 to 2026, global lithium resources may show a surplus, and the surplus will shrink year by year.
In terms of battery-grade lithium carbonate price trends, from 2023 to 2025, SMM expects that with the slowdown in the marginal growth rate of electric vehicle and energy storage market demand, coupled with the concentrated release of upstream lithium resource projects, the lithium market will turn from a mismatch between supply and demand in 2022 to a surplus, dragging down the price of lithium carbonate to continue to decline; entering 2026, SMM expects that the future prosperity of the energy storage market may drive demand growth, and in the context of long-term oversupply, resource expansion will continue to slow down, and the market surplus may be eased in the future。
It should also be noted that in the case of oversupply, lithium production capacity that relies on purchased materials and has high costs will face the risk of being eliminated.
The downward trend in lithium hydroxide prices has led to production cuts and continued destocking, but the futures reservoir effect has provided support for lithium carbonate prices in the context of oversupply
In terms of lithium hydroxide, its spot price has also fallen significantly since 2023, and related companies have reduced production and continued to go to storage.
The price of cobalt sulfate continued to decline in the face of weak demand, and the price gap between cobalt sulfate and nickel sulfate narrowed significantly in the past year
Since the second quarter of 2022, the price of cobalt sulfate has continued to decline amid weak demand, and the price gap between cobalt sulfate and nickel sulfate has also narrowed significantly in the past year.
As for the global supply of cobalt resources, the supply from copper and cobalt ore accounted for about 70% in 2022, and the proportion is expected to drop to about 60% in 2026 and about 55% in 2027. SMM expects the global supply of cobalt raw materials to grow at a CAGR of about 14% from 2022 to 2027.
As for the domestic supply of nickel sulfate raw materials, it is expected that from 2022 to 2027, the compound annual growth rate of nickel sulfate raw material supply will reach about 12%, and the proportion of MHP supply may increase year by year.
Indonesia has the largest share of the world's nickel resources, accounting for 43% of the world's total
In the past few years, the global nickel mining capacity has reached 3.01 million tons.
From the perspective of distribution area, nickel resources are mainly concentrated in eastern Asia, with laterite nickel ore as the mainstay.
Nickel sulphide ore is found in Canada, China, Russia and Australia.
In terms of country resources, Indonesia has the largest share of nickel resources in the world, accounting for 43% of the global total.
Most of the new intermediate goods projects are in Indonesia, and SMM expects Indonesia to account for 85% of the total intermediate goods production by 2027
SMM expects that from 2021 to 2027, the compound annual growth rate of Indonesia's nickel intermediate supply may reach about 58%, accounting for about 85% of the world's total intermediate production, and MHP and high-glacial nickel production may increase significantly.
Cobalt from the Democratic Republic of the Congo (DRC) and MHP from Indonesia will be the main source of cobalt feedstock supply in the future
In 2023, the total global supply of cobalt raw materials will be 248,000 tons of metal, of which the total supply of primary raw materials will be about 233,000 tons, mainly concentrated in the Democratic Republic of the Congo, Indonesia, Australia, Canada and other regions.
In addition, SMM expects that the supply of MHP and lithium battery recycling in Indonesia will gradually increase in the coming years.
Battery recycling is an important factor in sustainability
By 2030, China will lead the end market, and lithium iron phosphate recycling will surge
In terms of the recycling market, it is estimated that by 2030, the global recycling market may exceed 1,000GWh, and the proportion of lithium iron phosphate recycling will continue to increase. The overall recycling of nickel, cobalt and lithium will also continue to rise, and it is expected that the recycling volume may exceed 520,000 metal tons in 2030. Among them, the global recovery of nickel is about 250,000 tons, lithium is about 140,000 tons, and cobalt is about 120,000 tons.
In terms of the proportion of lithium-ion scrap, SMM predicts that from 2024 to 2026, the compound annual growth rate of lithium iron phosphate battery scrap will be about 58%, and from 2028 to 2030, its compound annual growth rate will be about 66%.