Some institutions are looking down on the future of cobalt, lithium and nickel

In late February, after selling shares in lithium producers and explorers, Morgan Stanley issued a forecast that the market for battery raw materials would become so oversupplied in 2022 that the price of cobalt, lithium and nickel would almost halve from current levels.

Some institutions see the future of cobalt, lithium and nickel in a negative light

Morgan Stanley's negative assessment has angered many in the industry, with many executives criticising the bank for seriously underestimating demand growth and production growth prospects for materials such as cobalt, lithium and nickel.

Joining the pessimists is WoodMackenzie, which this week released a report on battery materials that forecasts a collapse in cobalt and lithium prices starting in 2019.

Woodmakenziec expects lithium carbonate demand to increase from 23 percent in 2017. 30,000 tons to 330,000 tons in 2020 and 4.05 million tons in 2022. However, the supply is also increasing at the same pace. In the next few years, the demand for lithium batteries cannot keep pace with the development and utilization of lithium resources, and there will be oversupply in the future. As a result, prices are expected to remain high in 2018. However, in 2019 and beyond, supply will start to exceed demand, and the price level will in turn decline.

According to SMM data, the spot price of lithium carbonate in China's domestic market has risen from 16 in early December. 80,000 yuan/ton down 8. 6 percent to 15 percent. 350,000 yuan/ton, but the lithium metal price remains at 910,000 yuan/ton level.

Cobalt: the outlook is not good

Cobalt traded higher again on Thursday, at 8 cents a tonne for nearly a decade. A new high of $50,000, up 70 percent from a year ago.

Demand for cobalt hit 10 percent in 2017. Of the 40,000 tons, nearly half are used for batteries. Woodmac said the market will grow 9 percent to 11 percent this year. 30,000 tons, and by 2022, it is expected that the demand for cobalt in the pure battery market will reach 9,800 tons, accounting for 61% of the overall cobalt market demand.

From the supply increment of companies such as Glencore and ERG, there will be a large surplus of cobalt during 2019-2022.

Of course, these excesses have a downward impact on prices. Woodmac expects cobalt to average $75,000 a tonne this year, before falling back to $55,000 a tonne in 2019, before hitting a low of $33,000 in 2020 and 2021.

Nickel: favored

Woodmac is more optimistic about nickel's prospects, with demand for electric cars and energy storage batteries already at 50,000 tonnes in 2016 and expected to rise to 110,000 tonnes by 2020, less than 5% of the total nickel market.

While nickel stocks are likely to continue to decline in 2018, the trend is likely to slow in the 2019-2020 period as the increase in nickel supply narrates and approaches equilibrium levels during the global shortage.

Woodmac expects nickel prices to fall modestly in 2019, but is expected to trade in a range of $12,000 to $14,000 a tonne from the second half of next year through most of 2020. But with annual shortages expected to pick up in 2021, prices could reach above $15,000 a tonne in the final quarter of 2020.

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