THE lithium and nickel markets could be in for a period of consolidation as prices in both metals were unlikely to revive in the short term, according to a report by Bloomberg News.
“Both the nickel and lithium markets look likely to remain substantially in oversupply until the end of the decade,” Wood Mackenzie analyst James Whiteside told the newswire. “A lot of producers are burning cash, so any non-essential spend will remain curtailed.” The lithium price is down more than 80% since 2022 while nickel has halved since the start of 2023.
Prices of lithium have failed to rebound from a crash caused by softer electric vehicle demand and oversupply as miners have brought rapid production online since 2022, said Bloomberg News. Several miners have curtailed output, shuttered mines, and paused investment on expansion projects in the past 12 months, it said.
The impact of the ongoing global rout in prices, coupled with inflation and high costs, is forcing miners into a new era of capital discipline, and could trigger a new wave of consolidation through takeovers down the track, said Whiteside.
“M&A activity is typically elevated during periods of price stability,” Whiteside said. “There may be a window of opportunity for deals to be finalised,” he said, adding: “It’s cheaper to buy than to build in nickel at current valuations.”
