Battery metal prices slide as supply continues to outpaces demand — report

[Redator]

Battery metals markets remain under pressure as falling prices and oversupply weigh on producers, with little sign of a near-term rebound, the last analysis from Fastmarkets, a cross-commodity price reporting agency, shows.

Despite ongoing growth in electric vehicle (EV) sales, market fundamentals for lithium, cobalt, nickel, manganese, graphite, and recycled materials continue to deteriorate, driven by excess supply, sluggish investment and mounting policy uncertainty, according to the report.

Lithium prices have seen the sharpest decline. Spodumene spot prices in China fell 19.1% in May to $612.50 per tonne, down 30% since January. Lithium carbonate prices dropped 10.3% from April to RMB 59,650 per tonne, 20.3% lower than at the start of the year. While previous cuts to spodumene production had briefly stabilized the market, persistently weak salt prices in China have continued to compress processor margins, forcing sellers to discount further. Analysts warn that prices have yet to fall low enough to prompt another wave of output cuts.

“EV sales remain healthy, so the weakness in lithium prices is about oversupply,” William Adams, head of Base Metals Research at Fastmarkets, said in a report. He added that falling Chinese demand for battery energy storage systems, which were down 1.5% year-over-year in the first quarter, could further erode market sentiment.

Cobalt is similarly struggling with excess inventory and policy uncertainty, Fastmarkets says. Despite speculation over potential changes to cobalt hydroxide export rules in the Democratic Republic of Congo (DRC), no formal announcements emerged from industry meetings in Singapore. Prices weakened across all cobalt products in May, even as China’s trade data showed strong flows: imports of cobalt metal surged 60% month-over-month in April, while exports jumped 202% year-over-year. The glut has depressed seaborne prices, with refiners sitting on large stockpiles.

Rob Searle, a senior analyst at Fastmarkets, warned that the lack of clarity around DRC policy is exacerbating supply anxiety. “Chinese refiners face the prospect of a 60,000-tonne cobalt unit shortfall heading into Q3,” he said. “Prices remain soft, but a bullish turn may come if inventories start to draw down meaningfully.”

Cobalt producers, traders and recyclers seem to have higher hopes for the metals. A recent report published by The Cobalt Institute forecasts demand to rise faster than supply over the next decade, pushing the sector into deficit by the early 2030s.

Nickel continues to suffer from oversupply, particularly from Indonesia and China. The LME cash price dropped another 1.6% in May to $15,105 per tonne. While demand has held steady, the market remains flooded. Analysts predict another full-year surplus for 2025, and say only stricter supply discipline could reverse the slide.

“There’s no near-term bullish narrative for nickel,” Olivier Masson, principal analyst at Fastmarkets, noted.

Manganese offered a brief respite. Spot prices for manganese sulphate in China turned higher in late May due to restocking. Still, sentiment remains weak. Operating rates among Chinese producers fell slightly in April, and the long-term demand outlook remains uncertain amid low profitability for high-manganese chemistries. The recent announcement of a 2029 export ban by Gabon, one of China’s key suppliers, adds further complexity to the market.

Graphite faces persistent price weakness and mounting policy risk. While natural graphite remains exempt from US tariffs, synthetic graphite is still subject to a punishing 55% import duty. That, combined with uncertainty surrounding the US “One Big Beautiful Bill,” has cast a shadow over the sector. Synthetic graphite users in the US face sharply higher costs, while high inventories and slow demand continue to depress prices.

“Uncertainty on multiple fronts is holding back investment and diversification in the graphite supply chain,” Amy Bennett, principal analyst at Fastmarkets, noted.

Battery recycling, particularly hydrometallurgical operations, is also under pressure. Falling lithium prices have pushed black mass refiners closer to breakeven, as complex separation and purification processes struggle to stay profitable. Some recyclers are opting to offload low-grade manganese content at a loss rather than upgrade it to electrochemical quality. Strong demand for feedstock, especially from Asian refiners trying to maintain high utilisation rates, has led to a hot market for limited scrap supply.

“The market is squeezed between weak metal prices and tight feedstock,” Luke Sweeney, senior Recycling analyst said.

Energy storage systems (ESS) remain a bright spot for innovation, but face mounting headwinds. Lithium iron phosphate (LFP) technology continues to dominate, with sodium-ion and LMFP batteries gaining traction. Yet policy risks loom large. The proposed rollback of clean energy incentives in the United States, through the “One Big Beautiful Bill”, threatens to undercut investment and deployment momentum. Meanwhile, new safety standards in China and the US are raising the bar for ESS system design and performance.

“The sector is advancing fast,” said Walter Zhang, ESS Senior Analyst, “but policy shifts could slow the pace of deployment, particularly in the US”

While EV sales in China remain strong —up 30% year-over-year in May— and BYD’s international expansion is gaining steam, analysts caution that these demand drivers may not be enough to balance the structural oversupply across battery metal markets.

Fastmarkets anticipates the resilience of producers, traders and policymakers will be tested in the months ahead, as they navigate an increasingly volatile landscape.