According to Goldman Sachs Group Inc, the price of three essential metals such as Nickle, Lithium, and cobalt, will drop in the next two to years as investors move in too quickly to take exposure in the transition to green energy stocks.
The expected price fall of essential metals
According to a note on Sunday by analysts at Goldman Sachs that included Aditi Rai and Nicholas Snowdon, investors are aware of the crucial role batteries will play in the global economy in the 21st Century. However, despite the exponential demand, the bull run for the metal market is over for the time being.
However, the long-term prospects remain vital for the metal sector due to the fast adoption of electric vehicles. The investor’s bullishness led to oversupply, according to Goldman.
As per analysts, there is a surge in investment caused by investor capital supply to the long-term EV demand outlook. Investors are trading a typically spot-driven commodity into future equity. The mispricing in the fundamentals has led to greater supply much ahead of the demand trend.
According to the Wall Street bank, Lithium will see a sharp correction as metals are averaging $54,000 a ton this year, down from the $60,000 spot price. It is expected to fall further to an average price of $16,000 in 2023.
Cobalt is expected to drop from around $80,000 to an average of $59,500 a ton in 2023. As per the Analyst’s forecast, nickel is expected to rise by 20% over the rest of 2022 to $36,500 a ton before fundamental pressures bring it down again. The prices could increase again after 2024.
The bank said that this oversupply phase would pave the way for the battery materials super cycle in this decade’s second half. The demand surge will then sustain and overcome the supply growth currently.
