Policy-driven volatility ahead for critical metals

Industrial policy is now a central force shaping battery and rare-earth metal markets. We expect the global market for these products to split into a low-cost Chinese core and a higher-priced western segment.

What you will learn:

• Fundamentals remain soft, but policy is now moderating the downward market correction. Oversupply persists in nickel, cobalt, and (to a lesser extent) lithium, but interventions, from Indonesian quotas to US Foreign Entity of Concern (FEOC) rules, are sustaining capacity and delaying downward price adjustment.
• We continue to expect a modest price recovery for battery metals towards the end of the decade as demand for EVs grows but price volatility around politically sensitive metals is to be expected and represents an upside risk to prices for battery and rare earth metals.
• The long-term effect of these interventions is a fragmented market architecture defined by domestic supply chains and national industrial policy rather than efficiency. Battery and rare-earth metals are splitting into distinct trading blocs, where “eligible” units command sustained premia over benchmark prices. Chinese spot markets no longer reflect global reality, while policy-driven contracts in the US and Europe create persistent divergence.