COBALT MONTHLY REVIEW – OCTOBER: International metal prices rangebound; China faces pressure

Benchmark international prices for cobalt stabilized last month, but salts and metal prices fell in China amid weak demand and falling local futures prices, triggering a physical sell-off.

Global monthly cobalt market prices

Price moves:
Benchmark low-grade cobalt traded in the remarkably stable range of $33.50-34.45 per lb in October, where the assessment also ended the month.

Tightness continued in the low-grade market, which takes into account the broken cathodes and briquette material preferred by the battery sector. That tightness helped to underpin prices in October. Spot demand was slim and small tonnage sales between one and five tonnes were the norm, but sellers held limited stocks, with no pressing requirement to offer cheap to secure scant spot business.

After fulfilling their immediate cobalt needs, customers took more of a back seat, in anticipation of prices continuing their descent. Market participants are focused on 2019 supply negotiations, which is bringing spot activity to a minimum.

In China, metal prices took a hit after initially responding to a slump in local futures prices, cited to have responded to bearish macroeconomic cues.

Cobalt sulfate prices were also under pressure, with discounts against metal prices widening as a result of weak demand and the continued impact of increasing salts production.

Market news:
A 31% year-on-year reduction in cobalt production at Vale during the third quarter, alongside the continuing effects of sanctions on Chinese cobalt metal entering the US, both kept the cobalt market tight.

Vale also announced it was reviewing its mining plan for its New Caledonia operations to best obtain value from its cobalt material in the context of the growing electric vehicle battery market.

Ethical sourcing was back in focus once the London Metal Exchange announced it would go as far as to delist brands that fail to comply with its proposed responsible sourcing principles. According to the proposal, cobalt producers will have until the fourth quarter of 2019 to choose an OECD compliant standard on ethical sourcing, against which they will have to show compliance.

For cobalt especially, the LME said it may identify one or more listed cobalt brands as potential low-value brands that are trading at a 2% or greater discount to its other listed cobalt brands. Ultimately, brands could be delisted as confirmed “low-value brands” and related warrants removed from warehouses.

Outlook:
Cobalt prices have found a floor and picked up slightly after their summer declines. But, while market sources gathered in London in October for the annual LME Week, the focus was on the increase in cobalt-hydroxide production and the extent of its bearish impact on metal demand and prices.

“The price slide halted but it was not exactly followed by a rebound – despite a strong recovery in EV production after the disruption caused by China’s subsidy change. The halt in the price slide now looks more like a pause in the downtrend,” William Adams, Fastmarkets MB’s head of battery raw materials research, notes.

“We remain extremely bullish for demand growth, it’s just that the market will, over the next few years, have to absorb the supply response that is underway,” Adams added.

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
Proceed