The ramifications of the war in Iran are among the factors bringing volatility to commodity markets.
Logistics disruptions on top of supply uncertainties and changing government policies are creating a dynamic landscape to navigate.
However there is some price upside on the horizon, according to an S&P Global Energy price outlook for lithium, nickel and cobalt this week.
Australia is currently the world’s biggest lithium producer, accounting for about a third of global production, followed by Zimbabwe on 10%.
Between November and January, commodity prices rallied sharply as investors hedged against US dollar weakness, policy uncertainty and trade tensions but lithium led the run, S&P critical minerals markets analyst Jomar Camposano said.
“Asia prices were up 118% and the lithium price spread is even sharper than the volatility of silver, which recently captured headlines,” he said.
He traced the trend back to China’s revised laws, introduced in mid-2025, which tightened regulatory oversight on domestic lithium production and led to suspended and cancelled mining permits.
While China is responsible for about 70% of lithium refining globally, it’s heavily reliant on imported lithium and has been impacted by Zimbabwe limiting raw lithium exports as it looks to build domestic refining capacity.
Lithium prices reached their highest point this month since 2023 and associate price reporter Samantha Beh said on the demand side, market sentiment had strengthened with Chinese production plans for May.
Prices could soften as supply pressures eased.
“But risk remains tilted to the upside because of the lack of clarity over the duration of the Middle East war, and it has particularly affected ongoing lithium mine restarts this year in Australia as they are currently facing diesel shortages,” Camposano said.
Longer term, he said lithium prices could reach about CNY218,000/t in China and US$27,600/t per ton in Asia by 2035, driven by optimism in energy storage demand.
Turning to nickel, the market is being driven by Indonesia’s policy developments. The dominant producer dramatically reduced its annual mining quota in January to about 260 million wet metric tons, sending prices higher.
Camposano expected prices to remain volatile amid the ongoing surplus and uncertainty over Indonesian policy actions. He forecast deficits to return in 2030 with a forecast price of about $18,400/t.
Meanwhile Indonesia’s sulphur-intensive MHP nickel and cobalt production are facing risk of supply shocks, given 74% of its sulphur supply last year relied on Middle East imports which are being impacted by the effective closure of the Strait of Hormuz.
On cobalt, the Democratic Republic of Congo accounts for almost three-quarters of global supply and its ban on cobalt exports last year saw Platts’ assessed cobalt hydroxide price soar 350% from the beginning of 2025 to $25.90/lb CIF China on April 27.
However after the initial supply shock, Beh said buying interest was now reduced due to weak downstream NMC battery demand.
Battery metals are fundamentally well supplied this decade, Camposano concluded, adding that governments’ actions to constrain supply risked killing the long-term pipeline. However some governments were stepping in to “bridge the incentive gap” – of long development timelines and multiple metal price cycles – by investing in producers, which means the landscape will continue to evolve.
