Cobalt prices edge higher with supply tightness in focus

The cheapest offers for cobalt units dried up last week with spot material in tight supply, while some potential buyers put purchases on hold with international prices at high levels.

Metal Bulletin assessed benchmark low-grade cobalt prices at $36.75-37.40 per lb on Friday January 19, up 25 cents on the low end compared with the midweek assessment.

High-grade prices gained 5 cents on the high end of the assessment on January 19, now at $37-38.05 per lb, in-warehouse.

Demand remains healthy, with a limited number of sellers able or willing to offer material to a steady number of spot inquiries, market participants told Metal Bulletin. 

“Customers aren’t giving me a break to accumulate stock,” a producer source said.

Monthly optionality, where agreed on long-term contacts, is being declared by buyers, with the knowledge that spot availability is tight while their order books are strong.

“It ties back to the fact we’ve had downstream investment without the equivalent upstream,” a trader said.

With tight supplies and steady demand expected to persist, traders are happy to restock rather than liquidate their positions, resulting in a limited number of sellers in the prompt market.

“Unless they need the cash, it’s hard to get an offer from a trader. Two weeks later the price could be $2 higher,” the producer said.

For buyers in Europe, exchange rate factors have made buyers wary of purchasing too soon.

The weakening dollar against the euro over the past month has reduced the effect of rising prices in local currency terms since December.

Further afield, buyers are taking more time to commit to buying cobalt at prices over $37 per lb, keeping the pace of growth in check.

“The inquiries are there but people aren’t making decisions,” a second trader said.

“Buyers have a little bit of room and contingency stock… but by the time they do [book], the price will have jumped,” the first trader added.

The demand outlook continues to give sellers the upper hand in negotiations, others added.

“Sellers don’t care if they get pushback from buyers – they’re not going to lower their price,” a third trader said.

“[Some buyers] are trying to put their heads in the sand, but they might get a rude awakening,” he added.