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Bank of Montreal Capital Markets (BMO) recently said that there is already an excess supply of minerals needed for the production of electric vehicles, especially cobalt and lithium, and the penetration rate of electric vehicles is expected to slow by 15% to 25% by 2021, even if larger batteries are being developed to accommodate higher demand
.
Not only that, but BMO also lowered the expected global light vehicle penetration rate to reflect the 7%
decline in electric vehicle sales at the end of July this year.
BMO expects global sales of light electric vehicles to fall by 8 million units in 2019, to a total of 90 million
.
Annual sales of light-duty electric vehicles will be only 103 million by 2025, down from the previous forecast of 110 million
.
Analyst Colin Hamilton said in a note to investors on Friday, "We now see a cobalt glut situation that will continue into 2023 (assuming Glencore's business increases in Katanga, Congo)
.
" For nickel, slower EV penetration will bring more time to new supply projects, particularly from the high-pressure acid leaching (HPAL) business
.
”
The analyst also believes that Chinese battery producers are once again favoring nickel-free lithium iron phosphate (LFP) batteries, especially as the government's decision to reduce state subsidies for electric vehicles and other vehicles by using alternative drive systems with nickel-manganese-cobalt (NMC) technology makes them relatively more competitive
.
BMO believes that global cobalt consumption in the electric vehicle industry will reach 86,000 tons in 2025, down from a previous forecast of 97,000 tons
.
"Even as Glencore cuts capacity at the Mutanda mine, we are seeing a relatively substantial market surplus
in 2020-21.
Cobalt's best hope may be a shift in global smartphone demand (LCO cathodes still dominate)", BMO said
.
For nickel, electric vehicles account for a much
smaller percentage of overall market demand.
However, BMO forecasts nickel consumption in 2025 to now fall by more than 50,000 tonnes to 347,000 tonnes, with EV consumption accounting for 11% of total supply, down from 13%
previously forecast.
The bank expects this, though, to have no significant impact on prices, as Indonesia, the world's largest nickel miner, recently said it would stop nickel exports from Jan.
1, 2020, two years earlier than originally expected
.
Bank of Montreal Capital Markets (BMO) recently said that there is already an excess supply of minerals needed for the production of electric vehicles, especially cobalt and lithium, and the penetration rate of electric vehicles is expected to slow by 15% to 25% by 2021, even if larger batteries are being developed to accommodate higher demand
.
Not only that, but BMO also lowered the expected global light vehicle penetration rate to reflect the 7%
decline in electric vehicle sales at the end of July this year.
BMO expects global sales of light electric vehicles to fall by 8 million units in 2019, to a total of 90 million
.
Annual sales of light-duty electric vehicles will be only 103 million by 2025, down from the previous forecast of 110 million
.
Analyst Colin Hamilton said in a note to investors on Friday, "We now see a cobalt glut situation that will continue into 2023 (assuming Glencore's business increases in Katanga, Congo)
.
" For nickel, slower EV penetration will bring more time to new supply projects, particularly from the high-pressure acid leaching (HPAL) business
.
”
The analyst also believes that Chinese battery producers are once again favoring nickel-free lithium iron phosphate (LFP) batteries, especially as the government's decision to reduce state subsidies for electric vehicles and other vehicles by using alternative drive systems with nickel-manganese-cobalt (NMC) technology makes them relatively more competitive
.
BMO believes that global cobalt consumption in the electric vehicle industry will reach 86,000 tons in 2025, down from a previous forecast of 97,000 tons
.
"Even as Glencore cuts capacity at the Mutanda mine, we are seeing a relatively substantial market surplus
in 2020-21.
Cobalt's best hope may be a shift in global smartphone demand (LCO cathodes still dominate)", BMO said
.
For nickel, electric vehicles account for a much
smaller percentage of overall market demand.
However, BMO forecasts nickel consumption in 2025 to now fall by more than 50,000 tonnes to 347,000 tonnes, with EV consumption accounting for 11% of total supply, down from 13%
previously forecast.
The bank expects this, though, to have no significant impact on prices, as Indonesia, the world's largest nickel miner, recently said it would stop nickel exports from Jan.
1, 2020, two years earlier than originally expected
.
