Cobalt and Lithium – a Tale of Two Battery Metals
By Gregor Spilker
Loading...

Longer term, it is changes in battery chemistry that may have an even larger impact. Lithium-iron-phosphate (LFP) batteries consume less cobalt than those using nickel-cobalt-manganese (NMC) chemistry. Consultant Rho Motion estimated that LFP captures around 34% of the global EV battery market, with that share to rise to 39% by 2024. In response, cobalt bulls can argue that capturing a smaller portion of a much larger EV battery pie is still a positive development. In addition, the market is expected to remain heavily reliant on DRC production – a jurisdiction which presents risks.

Cobalt Lithium

The metals’ recent performance may appear lacking, but it’s worth looking at a longer time horizon – while lithium has now fallen by about 50% from its peak, prices are still three times higher than when CME Group first launched a lithium contract in May 2021. As for cobalt, the prices are right back where they were in early 2021 at levels at just below $20/lbs.

For customers, producers and financial investors, the increase in futures markets liquidity at CME Group means that there are now derivate instruments to protect against price swings – something that was previously only limitedly available in cobalt, and not available at all for the lithium market.

Cobalt open interest – or the number of unsettled futures contracts – set a record at above 20,000 metric tons in April 2023, or about $700 million notional at current prices and extends out to December 2025. While smaller, lithium open interest is now at over 1,500 metric tons, equivalent to $70m notional value and going out to September 2024.

Both metals have now lost about half their value since their respective peak prices in 2021/2022. For lithium, it is mostly Chinese demand that has chilled the market; for cobalt, the explanation most likely lies in DRC-specific issues. Yet the fundamental picture may not have changed much. Both metals remain key to the energy transition and are expected to continue growing in importance globally.


About the author

Gregor Spilker
Gregor Spilker

Gregor Spilker is Director of Energy Products at CME Group. He is based in New York.

 

 

OpenMarkets is an online magazine and blog focused on global markets and economic trends. It combines feature articles, news briefs and videos with contributions from leaders in business, finance and economics in an interactive forum designed to foster conversation around the issues and ideas shaping our industry.

All examples are hypothetical interpretations of situations and are used for explanation purposes only. The views expressed in OpenMarkets articles reflect solely those of their respective authors and not necessarily those of CME Group or its affiliated institutions. OpenMarkets and the information herein should not be considered investment advice or the results of actual market experience. Neither futures trading nor swaps trading are suitable for all investors, and each involves the risk of loss. Swaps trading should only be undertaken by investors who are Eligible Contract Participants (ECPs) within the meaning of Section 1a(18) of the Commodity Exchange Act. Futures and swaps each are leveraged investments and, because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money deposited for either a futures or swaps position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles and only a portion of those funds should be devoted to any one trade because traders cannot expect to profit on every trade. BrokerTec Americas LLC (“BAL”) is a registered broker-dealer with the U.S. Securities and Exchange Commission, is a member of the Financial Industry Regulatory Authority, Inc. (www.FINRA.org), and is a member of the Securities Investor Protection Corporation (www.SIPC.org). BAL does not provide services to private or retail customers.. In the United Kingdom, BrokerTec Europe Limited is authorised and regulated by the Financial Conduct Authority. CME Amsterdam B.V. is regulated in the Netherlands by the Dutch Authority for the Financial Markets (AFM) (www.AFM.nl). CME Investment Firm B.V. is also incorporated in the Netherlands and regulated by the Dutch Authority for the Financial Markets (AFM), as well as the Central Bank of the Netherlands (DNB).

©2025 CME Group Inc. All rights reserved