BATTERY MATERIALS CONF: Cobalt hydroxide price to be representative benchmark for cobalt market

Cobalt hydroxide prices reflect the true fundamentals of the cobalt market, and are likely to be one of the market’s most important benchmarks, delegates who attended Fastmarkets’ Battery Materials Conference in Shanghai heard last week.

“This is why we are happy to see Fastmarkets launch cobalt hydroxide assessments, which is more representative of the dynamics of cobalt market as a whole,” Forrest Deng, general manager of the research department at China Molybdenum said during a panel discussion on Friday April 12.

“In the past, we recognized the cobalt metal price assessed by Fastmarkets and priced other cobalt products at certain ratio against this assessment,” Deng said.

“However, the metal market at current and future stages can’t represent the whole cobalt market anymore [due to the relatively small size of the cobalt metal market],” he added.

The volatility of the cobalt metal price reflects the fundamentals of the metal market, but due to traditional pricing mechanisms, this volatility can filter through to other products in the cobalt chain, according to Deng.

Other panelists shared similar views, saying that the size of the cobalt metal market is not sufficient to dictate the whole picture of the cobalt market, and more specifically, to dictate the price of cobalt hydroxide which has its own fundamentals.

Two cobalt products, cobalt metal and cobalt hydroxide, have their own separate fundamentals, Tony Southgate from Stratton Metals told conference delegates.

Cobalt metal is typically consumed by the aerospace and catalyst industries, while the battery sector is the main consumer of cobalt hydroxide, with the latter having its own fundamentals which differ from that of cobalt metal, according to Southgate.

“The size of [the cobalt hydroxide market] approaches about 100,000 tonnes per year, while that for cobalt metal is at about 35,000 tonnes per year,” Southgate said.

“In the next few years, cobalt hydroxide price could be one of the most important prices for the cobalt market,” Southgate added.

Spot liquidity for cobalt hydroxide has picked up amid a downturn in the market since the middle of last year, after consumers become reluctant to commit to long-term contracts but still needed to top up their inventories.

Fastmarkets assessed the standard-grade cobalt price
at a two-and-half-year low of $13.30-14.20 per lb on March 22, down by 68.8% from a nearly ten-year high of $43.70-44.45 per lb on April 23, 2018. The price was most recently assessed at $15.35-16.75 per lb on April 12.

In quick response to this emerging spot market for cobalt hydroxide, Fastmarkets launched two cobalt hydroxide assessments in February this year, including a monthly cobalt hydroxide index and a twice-monthly assessed cobalt hydroxide payable indicator against the low end of Fastmarkets standard-grade cobalt benchmark price.

Fastmarkets’ monthly cobalt hydroxide index, min 30% Co, was at $9.81 per lb, cif China, on March 29, while the payable indicator was at 66-68% against Fastmarkets’ standard-grade cobalt price (low end) on the same day.