Our base case forecasts, published by our colleagues in Commodities Research, call for plug-in electric vehicles (BEVs and PHEVs) to grow from just 1% of global auto sales in 2016 to more than a 5% market share by 2025. The most robust growth should come from hybrid electric vehicles (HEVs), as Europe moves aggressively away from internal combustion engine vehicles. This sector is forecasted to grow from around a 2% market share last year to 26% globally by 2025.
EV battery chemistries are expected to shift towards a higher share of nickel but lower cobalt intensities as manufacturers choose to move forward with higher energy-density nickel at the expense of cobalt given its problematic supply chain.
Glencore commissioned analysis by CRU which implies additional metal requirements of 1.4Mt copper (~6% of the current market), 370kt nickel (~20%) and 106kt cobalt (>100%) by 2025, helping to justify their decision to more than double cobalt output in the DRC to ~65kt by 2019.
Here is a link to the full report.
The excesses in the global steel sector, primary driven by overcapacity in China, are well documented. Right now, the risk represented by that headwind are being outweighed by synchronized global growth. Meanwhile significant investment is flowing into capacity growth for the resources required to supply battery manufacturing.
Right now, BHP Billiton is performing in line with the industrial mining sector as it bounces from the region of its trend mean.
Arcelor Mittal, one of the largest steel producers outside China, is rallying towards the upper side of its four-year base formation.
Whitehaven Coal has survived the purge of coal producers and is now becoming quite overextended relative to its trend mean.
Meanwhile miners with more of a focus on battery related materials represent the supply inelasticity meets rising demand aspect of the current market. Glencore, through its part ownership of Kitanga has cobalt exposure as well as significant copper and nickel assets. Orocobre is the closest company I have found to a pureplay on lithium mining that is also a producer. Sherritt International has both nickel and cobalt assets.
Glencore firmed from the region of the trend mean three weeks ago and remains in a reasonably consistent medium-term uptrend.
Orocobre extended its advance over the last few days, following the announcement of a further jump in the price of lithium it expects to achieve in Q12018.
Katanga is showing tentative signs of finding support in the region of C$1.50 and will need to hold that level if the consistency of the recovery is to remain intact.
Sherritt International has a relatively similar pattern to nickel as it tests the upper side of a two-year base formation.