Under the Russia-Ukraine conflict, will the lithium battery industry become a victim?
Recently, the conflict between Russia and Ukraine has attracted global attention, and at the same time, the price of commodities has risen, which has exacerbated the predicament of the lithium battery industry.
It is understood that Russia is an important resource supplier of nickel. According to data released by the United States Geological Survey (USGS) in January 2022, the global nickel mine production in 2021 will be about 2.7 million metal tons, mainly from Indonesia, the Philippines and Russia, of which Russian nickel The mine production accounts for about 9% of the global total production (including low, medium and high grade nickel), ranking third.
Stimulated by the escalating crisis in Ukraine, as of the end of February, the London Metal Exchange (LME) nickel futures continued to rise, reaching a maximum of $25,135 per ton, setting a new high in nearly 11 years. Analysts at Commerzbank believe that “the price hike may be driven by concerns about supply disruptions, as the Ukraine crisis appears to be still intensifying.”
In terms of inventory, since April last year, LME nickel inventory has continued to decline, from a high of 264,606 tons to the latest 94,872 tons, a range of about 63.3%. Shanghai nickel inventories fell to 4,711 tons, still at a historically low level.
Experts from evoke energy said: “The global nickel spot supply is showing signs of a rare shortage in more than 10 years.” The global nickel market is worried about tightening supply and the reduction of inventories will support further nickel prices. At the same time, the formula-based pricing contracts signed by electric vehicle companies cannot enable battery companies to avoid the impact of rising raw material prices, which will lead to accelerated backward integration of battery companies.
Nickel is an important raw material for lithium battery cathodes. Market research agency SNE Research predicts that by 2025 and 2030, the global demand for nickel metal in power batteries will increase to 841,000 tons and 2.370 million tons, respectively, about this year (385,000 tons) 2 times and 6 times.
At the same time, many countries have strengthened the management and control of related mineral resources. As early as January 1, 2020, Indonesia implemented a policy of completely banning the export of nickel ore. At that time, the tight supply and demand of global bulk commodities will be greatly intensified, and the relevant global industrial chains will be severely impacted.
In February this year, evoke energy recently signed a series of strategic cooperation agreements to ensure long-term stability and advantages in the fields of power battery recycling, overseas nickel resource smelting, and precursor product supply and sales.
In addition to nickel, Russia is also the world’s second largest primary aluminum producer and aluminum exporter. In 2020, Russia’s aluminum production accounted for about 6% of global primary aluminum production. In 2019, Russia’s aluminum export volume was 1.9 million tons, accounting for 17.4% of the world’s total trade volume. %. On the day of the conflict, aluminium prices on the London Metal Exchange rose 4.8% to $3,449 a tonne. Aluminum is mostly used in aluminum battery boxes, body, chassis structural parts and other parts, and is one of the materials that account for the largest proportion of current automotive products other than steel.
Ukraine is a source of neon gas, an important raw material for the chip industry, and a producer of palladium. It is understood that the demand for palladium in the automotive industry accounts for 85% of the total global demand, and the palladium supplied by Ukraine accounts for 50% of the US supply. 35%.
“The conflict between Russia and Ukraine has added fuel to an already tense base metals market,” said ING analyst Wenyu Yao.