Cobalt low-grade low hits 21-month high

The low-grade low cobalt price hit its highest point in about 21 months this week, as tight producer supplies combined with stock depletion.

The low-grade low cobalt price hit its highest point in about 21 months this week, as tight producer supplies combined with reasonable demand.

Low-grade cobalt reached $13.90-14.90 per lb on Wednesday February 19, up from $13.75-14.75 on Friday February 14.

This was its highest point since the May 30 2012 level of $14-15.10.

High-grade cobalt, meanwhile, hit $14.15-15.15 per lb on Wednesday, up from $14-15 previously.

Cobalt prices have gained support from tightening producer supplies at a time of reasonable consumer interest on both a long-term and spot basis.

This, one source claimed, has given sellers the upper hand during recent negotiations.

“It’s a seller’s market. You don’t have to reduce your price,” claimed the trader.

Sources noted that although the number of spot sales has risen in 2014, with more than 84 tonnes reported sold so far this week, the rally has been driven first and foremost by supply constraints.

“Demand is steady. This is not a rally sparked by sudden demand,” a second trader said.

“It’s driven by supply, which makes it a healthier rally,” he added.

“And because demand is steady and supply is lower, the stock build-up we’ve seen in the past has been depleted,” he added.

The trader did not expect to see the same build-up in stocks this year as was evident during the summer of 2013.

However, many profit-taking traders had picked up material at lower prices towards the end of 2013, and earlier this year, and are keen sellers at recent prices.

“Prices are drawing out some sellers from China,” a third trader said.

This could be a potential dampener for the rally, some said.

But while traders may be happy sellers at recent prices, it is producers that bring fresh supplies to the market, and several producers continue to report tightness.

“We haven’t got anything left that’s not committed on long-terms,” one producer said.

“People are calling maxes on contracts, and they expect this in coming months too, so this could continue for several months,” the producer added.

Consumers also acknowledged that prices have come up steadily, although some were hopeful that the rally would come to an end in the near future.

“Things have picked up, particularly for batteries,” one consumer said.

“I don’t know why it’s moving up. I think this will maybe last until March,” a second consumer said.

Official London Metal Exchange cash cobalt prices were more or less stable in the first half of the week, at $31,200/32,200 per tonne ($14.15/14.61 per lb) on Wednesday February 19.

Fleur Ritzema
Twitter: FleurRitzema_MB