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“Global cobalt resources are concentrated, and after the existing supply increment is released, it is expected that there will be no new resources for a long time,” CMOC said.
The company, which is the world’s largest cobalt producer, reported a 178% year-on-year increase in cobalt metal production in the first half of 2024.
“I think we have definitely seen peak oversupply [for cobalt],” a European trader told Fastmarkets.
“Demand is steady, however there are still stocks of [cobalt] hydroxide around,” they added.
Other market participants, however, expected CMOC to continue to produce at a high volume despite the announcement.
“I don’t think output will be any slower. It will continue at least in the same vein [for the rest of] this year,” a second trader source said.
Fastmarkets’ daily price assessment of cobalt hydroxide 30% Co min, cif China was $6.20-6.40 per lb on Wednesday September 11, unchanged from the previous session, but down from 2024’s first assessment on January 2 at $6.60-6.80 per lb.
CMOC produced 54,024 tonnes of cobalt metal in the first six months of this year, when compared to a total cobalt output of 55,526 tonnes for the full year of 2023.
According to Fastmarkets data, the total mined supply for cobalt was 232,000 tonnes in 2023 and is forecast to be 264,000 tonnes by the end of 2024.
The miner maintained its outlook for cobalt production, which was set at the beginning of the year, at 60,000-70,000 tonnes. Two of CMOC’s mines in the Democratic Republic of Congo (DRC), TFM and KFM, have an annual cobalt production capacity of 87,000 tonnes, it said.
“TFM and KFM maintained a fast-paced production mode with output [exceeding] their targets in the first half of the year, achieving record-breaking monthly output,” CMOC said.
“Cobalt prices did not meet expectations due to insufficient operating rates in the downstream industry chain,” CMOC added.
The standard grade cobalt metal price slumped to an eight-year low, falling below $11 per lb on the low end of the range for the first time this year in August.
Fastmarkets’ daily cobalt standard grade, in-whs Rotterdam price was $10.25-12.30 per lb on Wednesday, unchanged from the previous assessment on Tuesday but at its lowest point since 2016.
Cobalt, which is a byproduct of copper mining in some areas, has faced oversupply issues due to the climbing prices of copper.
Three-month copper prices on the London Metal Exchange hit a record high of $11,104.50 per tonne on May 20, well above the previous all-time high of $10,845 per tonne set in March 2023, with the surge in demand and prices leading to a rapid rise in copper output, which has, in turn, resulted in an increase in the output of cobalt.
“Copper is still bringing in money, therefore copper production is not going to slow down, which will invariably result in more cobalt supply,” a third source told Fastmarkets.
The current prices for three-month copper have dipped from their May highs, but they are still up when compared to prices at beginning of the year. Three-month copper prices on January 2 stood at $8,544.5 per tonne, compared with the last close price of $9,026 per tonne on September 10.
CMOC’s copper metal production in the first half of 2024 stood at 313,788 tonnes, an increase of 101% from the previous year, reaching 58% of the production guidance midpoint and 75% of the annual copper production in 2023.
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