Analyzing Price Elasticity of Supply and Demand for Battery-Essential Minerals: Insights from Recent Market Dynamics

This chapter delves into the price elasticity of supply and demand for key minerals crucial for battery production, including lithium, cobalt, graphite, manganese, nickel, and copper. It employs advanced econometric methods such as two-stage fixed effects approach and two-stage dynamic ordinary least squares (2S-DOLS) to estimate these elasticities, providing both static and short-run insights. The analysis reveals that demand for lithium, nickel, manganese, synthetic graphite, and copper is less responsive to price changes compared to supply, while cobalt and natural graphite exhibit greater price responsiveness in demand. Recent market shifts, particularly the surge in electric vehicle sales, have influenced these elasticities, indicating a lower responsiveness of demand to price changes amid tightening supply conditions. The study concludes by highlighting the importance of understanding these elasticities for strategic inventory management, pricing policies, and market stability in the rapidly evolving battery materials sector.