COBALT INSTITUTE CONF 2019: 5G mobile phone not likely to boost cobalt demand significantly

Some mobile phone producers have started to develop devices that support the fifth generation (5G) network, but long-term support for cobalt demand from 5G phones will be limited, Fastmarkets heard on the sidelines of a cobalt conference in Hong Kong this week.

There was likely to be an instant boost for cobalt demand, however, when many consumers replaced their 4G mobile phones with those enabled for 5G, market sources told Fastmarkets at the Cobalt Institute Conference in Hong Kong, May 15-16.

But this support for cobalt demand was likely to be short-lived because the total consumption of cobalt for mobile phone manufacture was not expected to rise significantly, they added.

“When consumers want to upgrade, you might see a large degree of demand for the new phones, resulting in extensive orders for lithium cobalt oxide [LCO] batteries and the battery raw material – cobalt tetroxide,” a battery materials producer said. “But once every consumer has their new phone, you won’t see any more demand.”

Fastmarkets assessed the price of cobalt tetroxide in China at 180,000-190,000 yuan ($26,070-27,519) per tonne on Wednesday May 15. This was down by 2.6% from 185,000-195,000 yuan per tonne on May 10.

Some market sources expected an increase of 20% in the amount of cobalt required for each 5G mobile phone.

But other market participants told Fastmarkets that the perceived growth in cobalt content for each phone was not because each regular battery unit needed that much more cobalt, but because some foldable 5G mobile phones will need two battery units.

But not every 5G mobile phone will be of a foldable design. Most 5G phones will be powered by a single battery unit in the same way as 4G phones, according to market participants.

“It is certain that a foldable mobile phone is much more expensive than a normal one, so it is likely that the market share for foldable 5G mobile phones will be minimal. And the pick-up in cobalt demand due to foldable mobile phones will be limited,” the first battery materials producer said.

No matter which scenario develops, the adoption of 5G mobile phones was not expected to pick up significantly this year, market participants told Fastmarkets. They attributed the slow start to the bottleneck of 5G mobile phone performance and the high production costs at the current stage of development.

“The [overall less satisfactory] performance will be a key issue to solve before 5G mobile phone production starts to ramp up,” a second battery materials producer said.

“We’ve heard in some cases that 5G mobile phones have been returned by consumers due to performance issues,” the first battery materials producer said. “It will not be easy for 5G mobile phones to be adopted widely before the technology bottleneck is solved.”

More market participants on the conference sidelines attributed the expected slow adoption of 5G mobile phones to be a result of the comparatively high production cost.

“The crucial thing is to optimize the production cost for 5G mobile phones,” a third battery materials producer said.

And the first battery materials producer conclued by asking: “Imagine how many people are willing to spend more than 10,000 yuan [about $1,450] to buy a mobile phone?”

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