Cobalt prices succumb to lackluster demand, profit-taking

Cobalt prices continued to fall during the second half of last week, and prices for both grades converged, amid continuing profit-taking and slower demand from consumers.

Metal Bulletin assessed prices for low and high-grade cobalt metal at $42-43 per lb, in-warehouse, on Friday June 1, down 0.8% and 0.9% respectively compared with the midweek assessment.

Consumers have taken a step back from purchasing over recent weeks, and while an increase in inquiries was initially reported for the week following the Cobalt Institute conference in Las Vegas, some of these are yet to materialize into firm transactions while buyers take their time to mull offers, market sources told Metal Bulletin.

“There are a number of inquiries. It’s not a fundamental [demand] issue, we’re just waiting for business to get concluded,” an Asia-based trader said.

Buyers are also holding out in case prices should fall further over the coming weeks, especially with weaker sellers in the market when it enters the traditionally slower summer period.

“It’s consolidation. There’s a bit more material available and a touch of the summer lull being anticipated,” a producer said.

“People are holding off from buying, but they can only do that for a month or so,” a second trader said.

There remains the cloud of possible profit-taking from traders who entered the cobalt market last year, and are liquidating their positions and offering at cheaper levels to attract scarce spot inquiries

“The small sellers are being shaken out, one to five tonnes at a time,” a third trader said.

But even those sellers are not willing to cut their offers significantly to secure a sale, sources said. Some potential sellers are offering material on the basis of Metal Bulletin’s June averages, but are not open to aggressive discounts.

For the time being, most market participants agreed that prices were falling and were due a correction following an uninterrupted rally between October 2017 and April 2018.

“There’s more material from the Democratic Republic of Congo and the falling salts price in China is encouraging metal to do the same, but long-term inquiries are mounting up and eating into the available units; the world’s not flush with material,” a fourth trader said.

Metal Bulletin assessed the discount available on cobalt sulfate against the Metal Bulletin low-grade cobalt low price at $1.07-1.37 per lb, ex-works China on Friday. Sulfate briefly traded at a premium of $0.01-0.32 per lb in the first half of April.

Sulfate prices have since weakened owing to thin buying interest from cathode producers in China.

Ultimately, sources were also in agreement that after a period of correction, prices are likely to stabilize and increase once more, underpinned by steady, strong demand.

“It is extremely brisk under the surface. If we don’t get our [offer] price now, I’m sure we’ll get it in August or September. Financing is cheap and we’re happy to wait,” a final trader said.

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