Coronavirus impact on battery raw materials: Cobalt

But, seaborne prices for processed materials could become tight because China is the world’s largest processor of cobalt, some of which is exported.

Supply and stocks

• Production halts (Mutanda) have caused concern about tightness, but producer stocks are high.
• A slowdown in Chinese demand for electric vehicles (EVs) is likely to lead to less demand for cobalt intermediates and therefore a drop in hydroxide payables.
• But as China is the main processor of cobalt products, some of which are exported, disruptions to exports could create shortages in the supply chain ex-China.

Demand

• We expect already weak demand in China to be hit further as demand for NEVs suffers while household and business confidence likely deteriorates in the short term.
• But European original equipment manufacturers (OEMs) relying on lithium battery cells from Asia may suffer supply chain disruptions - this could hit EV manufacturing.
• If prolonged, disruptions will this persuade the EU to delay the introduction of CO2 penalties, penalties that the traditional internal combustion engine OEMs cannot really afford anyway given the depressed auto market.
• Demand for cathode materials from non-Chinese based production likely to pick-up.

Logistics since the outbreak began

• Delivery of shipments to China may be delayed due to port and transport congestion.

Lessons learned

• Avoid being dependent on supply chains from one country/region.
• Shorten supply chains and diversify supply chain were possible.
• Should be good news for European battery industry.