Four talking points ahead of Cobalt Congress 2023

The key talking points ahead of the Cobalt Institute’s Cobalt Congress 2023, taking place in Istanbul, Turkey on May 9-11

1. Cobalt prices at multi-year lows

Market participants are heading to the conference with a focus on the collapse of cobalt prices’ over the course of the last 12 months.

Forecasts of an oversupplied market and a demand picture heavily affected by macroeconomic factors has pressured prices to fall to multi-year lows.

As market participants head into the conference in a few days’ time, it is important to remember this time last year, a period when cobalt metal prices had crossed the $40-per-lb mark and participants were looking for further upside in prices.

Now, twelve months later, participants are looking for the market to reach a bottom. The standard grade price is currently at its lowest point since July 2020.

“Earlier in the year, $15 per lb was the resistance point for standard grade and it bounced up from there; now it’s back down and has broken through this level. It likely has further to go,” a trader said.

Fastmarkets’ daily price assessment for cobalt standard grade, in-whs Rotterdam was $14.50-15.80 per lb on Thursday May 4, widening downward from $14.60-15.80 per lb a day earlier.

With a midpoint value of $15.15 per lb on May 4, this makes for a 62% decline in price from a midpoint of $40.13 per lb on May 3, 2022.

Fastmarkets’ daily price assessment for cobalt alloy grade, in-whs Rotterdam was $15.25-16.00 per lb on May 4, narrowing downward from $15.25-16.25 per lb on the day before.

“It’s going to be a very bearish conference; a lot of the sell side see the bottom being maybe a dollar or two out from here but who knows,” a second trader said.

“I think there will be more sellers than buyers at the conference, with the price so low and many people expecting the price to go down, especially when some are speculating the cobalt price to decline to $13 or $12 [per lb],” the second trader added.

A consumer source told Fastmarkets that it is a buyer’s market at the moment but they were not desperate to buy.

“There is not enough metal material around, but people are not desperate to buy. A lot of consumers have already secured their material,” the consumer source added.

“The price is low already, but some people are expecting the price to decline so I expect some may be hesitant to commit to long-term contracts. I expect to see more people looking at short-term contracts rather than long-term contracts next week at the conference,” a third trader said.

In Asia, sentiment among battery producers remains bearish owing to slower-than-expected demand despite strengthening electric vehicle (EV) sales. This has created a global weakening in cobalt prices due to China being the largest battery producer and EV market.

Talking points ahead of the Fastmarkets Asia Battery Raw Materials conference on May 1-3 discussed destocking and falling operation rates amongst cathode and battery makers.

2. Prolonged oversupply expected for the cobalt market

Expectations of an oversupply in the cobalt intermediates market have kept cobalt hydroxide prices under significant pressure in recent weeks, with cobalt hydroxide prices having hit their lowest level in three years.

Fastmarkets’ researchers have forecast a global cobalt surplus of 4,000 tonnes in 2023, with that surplus increasing to 16,000 tonnes in 2024. Fastmarkets Research is due to publish an updated figure later in the month.

Fastmarkets’ cobalt hydroxide index 30% Co min, cif China was calculated at $7.65 per lb on April 28, down by $0.47 per lb from $8.12 per Ib on April 21. The index is now at its lowest level since July 2019 and is down from $10.54 per lb at the beginning of 2023.

There was news last month that mining company China Molybdenum Co (CMOC) had reached a consensus with Congolese state-owned miner Gécamines following a long dispute over royalties. The dispute reached a head in July 2022 when an export ban was imposed on material produced at the Tenke Fungurume mine. Production was still permitted which led to a stockpile amassing.

The market now expects this stockpile to approach the market later this year, now a consensus has been reached.

After the consensus announcement, market participants were split on the market impact of this material, with one stating “cobalt hydroxide prices will struggle deeply with the news” whilst others felt the news had been “priced-in” and so the impact would be “relatively minor”.

Some market participants told Fastmarkets the shipment duration for transporting material out of mines in the Democratic Republish of the Congo (DRC) and to the rest of the world potentially face delays as long as several months due to logistical hurdles.

“It’s not only the paperwork, waiting for customs etc., there is also a potential risk for strikes too. It will take a while for material to hit the market,” a trader based in South Africa said.

But many market participants have also been reporting that the news about the Tenke Fungurume mine has added pressure to the market and reinforced the existing bearish sentiment.

In addition to the supply from the DRC, some market participants told Fastmarkets that there is more metal coming from China because some Chinese cobalt intermediate producers are converting cobalt intermediates to cobalt metal to make profits.

“We are seeing some Chinese intermediate producers are converting cobalt intermediate into metal production because cobalt intermediate prices are down,” a broker source said.

“It costs about $5 for converting, the hydroxide price is roughly $7-8, so it costs about $13 per lb to make metal. Then they can sell at the current price of $15-16 and make a few dollars per lb profit,” a producer source said.

Fastmarkets’ twice-weekly assessment of the price for cobalt sulfate 20.5% Co basis, exw China was 35,000-36,000 yuan ($5,065-5,210) per tonne on April 28, down from a high of 42,000-44,000 yuan per tonne on March 3.

3. Cobalt futures contracts enjoy popular twelve months

Another change over the last twelve months has been the rising popularity of cobalt metal futures contracts offered by the CME Group. The contracts breached the 20,000-tonne level for open interest for the first time on April 25.

In the runup to last year’s conference, open interest stood at 2,002 tonnes on April, 25 2022, a ten-fold increase on the year.

Much of the popularity has reportedly come from original equipment manufacturers wishing to ‘hedge out’ their forward quarterly production lines by using a financially settled contract rather than taking on the risk of additional physical material.

The contracts have seen a large degree of activity in the aftermath of the CMOC consensus announcement, with 2024 and 2025 dated contracts especially so.

Market participants utilize futures contracts as a way to manage risk on long-term forward delivery deals.

4. Legislation now forcing supply chain conversations

The global push to secure whole supply chains of battery raw materials is quickly becoming a priority for Australia, Asia, Europe and North America.

With countries having differing levels of policy goals for the transition to a lower-carbon future, developing supply chains and safeguarding vital battery resources have now become the main point of conversation for many.

Conversations can focus on financial incentives for businesses after US President Joe Biden introduced the Inflation Reduction Act in August 2022, promising tax relief for qualifying EV purchases. The Act also prioritized grants for ‘critical mineral’ supply chains involving countries that hold free-trade-agreements with the US, a move to reduce reliance on China for such materials.

Looking ahead to the conference, it is likely these supply chain conversations will continue with panel discussions on the topic a key point for the future.

Keep updated with the latest news and insights on our cobalt market page.

What to read next
The United States’ Inflation Reduction Act (IRA) and ongoing renewable energy transition could reorientate silicon consumption and production dynamics, emphasizing the demand for high-quality material required for solar panels, computer chips and electric vehicles (EVs)
Australian graphite producer EcoGraf has entered into a non-binding cooperation agreement with POSCO international (Posco) for the development of an integrated anode supply chain which would cover flake graphite mining to downstream anode production
Tanzanian graphite company Black Rock Mining has agreed a binding offtake deal with Posco, including a prepayment of $10 million, to feed the South Korean conglomerate’s growing anode business
Finland-headquartered Fortum Battery Recycling has signed an agreement with refinery AMG Lithium for the supply of recycled lithium hydroxide, the two companies said on Wednesday May 24
The price of graphite flake fines in China continued to edge lower amid slow demand and a depreciation of the local currency in the week ended Thursday May 25. Spherical graphite prices in the country, meanwhile, held at the 11-year low reached in the previous session
Chinese lithium prices continued to trend upward over the past week, but at a slower pace than in previous weeks due to the emergence of bearish sentiment and resistance among consumers
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.