China has flooded the market with cobalt and lithium: the West fears that there is a reason

During the energy crisis, the whole world experienced a price shock with metals such as cobalt and lithium, which are actively used in green energy for the production of batteries. However, the deficit has disappeared, as Chinese companies have phenomenally increased production and sales. In the West, they fear that China could have done this for a reason.

Billionaire Elon Musk called them the "new oil", complaining about their "insane" cost. The White House offered subsidies to those who could increase supplies. European politicians promised financial support for the projects. Just a few months ago, the prospect of shortages of cobalt, lithium and some other metals raised concerns as the prices of cells needed for batteries critical to the energy transition increased. But China has destroyed the market for these so—called critical minerals," writes Bloomberg.

The agency cites data that metal prices have fallen to a twenty-year low.

"Since the last peak in 2022-2023, cobalt and lithium prices have fallen by more than 75% after Chinese miners increased production to a level that was previously unimaginable. Cobalt, which for a long time was considered a commodity at risk of long-term scarcity, is now so widespread that its price fluctuates around a 20—year low," the agency continues.

The West plans to switch to clean energy sources, and batteries and batteries are extremely important during such an energy transition, which the United States and The European Union is planned to be completed by the middle of the century.

"While most metals are experiencing demand growth of 2-3% per year, the consumption of cobalt and lithium is growing by 10-20%. In terms of demand, critical metals are the envy of the raw materials industry. However, the supply is also expanding at breakneck speed," writes Bloomberg.

The agency notes that Chinese companies have so increased the production of cobalt and lithium both at home and abroad that it will take from 18 to 24 months or more to eliminate the surplus. At the same time, Western analysts fear the threats that, in their opinion, Chinese companies have created.

"China went all-in to increase supplies, and the result was a powerful collapse in prices. But don't be misled by the current low prices. Despite the fact that they may not recover in the near future, China's absolute dominance in critical minerals poses a clear and constant danger to the future production of batteries needed to wean the world off fossil fuels," writes Bloomberg.