The Critical Materials Price Index tracked by Project Blue dropped to a 12-month low in May, but the energy transition market intelligence company now believes last month marked a bottom in the cycle for the basket of 30 metals and minerals.
The index reached a high in March last year, spurred by a post-covid recovery but was quickly dragged down by a weakening global macroeconomic picture, surging energy costs and a less than inspiring recovery in China, responsible for the bulk of consumption in most sectors.
Steven Seget, Project Blue director and co-founder, says short-term critical materials price rises will be largely driven by battery and EV materials prices with lithium, nickel sulphate and rare earth prices set to recover sharply over the next three months.
Lithium prices will increase by around 20% as purchasers return to the market and build sufficient inventory to meet improved battery demand outlooks. Purchasing activity will continue to build, supported by higher-cost producers in China according to Project Blue:
“However, across the 30 different critical materials prices, the picture will continue to be mixed over the short term. Some critical materials prices, including graphite, magnesium and titanium, are likely to continue to fall over the period as they address more market specific challenges impacting their supply chains.”
Cobalt market in flux
The cobalt market could be at an inflection point. Prices for cobalt concentrate exported to China is down a whopping 75.4% year on year while prices for LME metal have dropped 57%, but Project Blue is finding evidence that payables are now creeping up, thanks to logistical issues in the Congo.
Reuters reported in late May that the DRC government has plans to hike its stake in Sicomines joint venture with Chinese firms from 32% to 70% as part of an overhaul of the central African nation’s $6 billion infrastructure-for-minerals agreement.
The Tshisekedi Government appears concerned that too much of the DRC’s copper and cobalt resources were given away during the Kabila era, with little benefit to the country, says Project Blue.
The DRC also halted Eurasian Resources Group’s Boss Mining copper-cobalt project over environmental concerns but “the suspension is unlikely to impact the cobalt market much as things stand but could remove roughly 2–3 kilotonnes of material from an oversupplied market in 2023.”
Project Blue says current cobalt prices probably constitute a floor and the market will stabilise over the coming weeks.
