To meet demand for battery metals in coming years, metal prices need to rise, UBS analysts said in a March 4 research note.

"We don't think that the raw material supply-side is ready for the wave of demand that is coming should our [electric vehicle] outlook hold," UBS analysts said.

The analysts said they were "more confident than ever" that EVs will penetrate the market at levels higher than they previously forecast. They estimated EV penetration increasing from 4% currently to 20% of the market by 2025 and 50% by 2030.

"While some of the commodities needed for an EV are not considered scarce (i.e. lithium) there is still a lack of named projects to meet the pick-up in demand," the analysts said.

Considering lithium projects in the pipeline out to 2030, the analysts estimated supply will only satisfy 22% of the need created by market penetration of EVs.

"The rapid rise in raw material demand sees deficits forming over the next decade even if we assume all known projects come to market," the analysts said. "We believe prices need to rise to incentivize not only idle capacity to return to ensure supply in 2021, but to encourage exploration and investment to meet medium to longer term demand."

On the back of the demand projection, UBS raised its lithium price forecast, including an increase in its long-term lithium carbonate CIF Asia price to $11,000 per tonne, up from $10,500/t.

In other metals, Bloomberg analysts cast copper, which has surged in price in recent quarters, as bound for a pullback. "Is copper becoming irrationally exuberant?" the analysts asked in a March report on markets. "The lack of a greater-than-10% pullback since the March 2020 low leaves copper's 100% recovery about extended as it gets and overdue for reversion, if history is a guide."

While the Bloomberg analysts noted that demand for copper is increasing, they said price is playing a moderating role in the market. "Demand is on the rise, but the commodity mantra that the cure for high prices is higher prices seems prime for copper at the end of February," they said.