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US senators unanimously approved the so-called trade status revocation bill HR 7108, which revokes the status of permanent normal trade relations (PNTR) applicable to Russia and Belarus until January 1 of 2024.
This will lead to the imposition of higher trade tariffs on products and imports from the two countries into the US, effective immediately after the enactment of the law.
The bill’s signing will affect cobalt products listed under HS code 8105.20.30, which the Harmonized Tariff Schedule (HTS) defines as cobalt mattes and other intermediate products of cobalt metallurgy; unwrought cobalt; powders; and unwrought cobalt: alloys.
The higher duty rate for these products is listed as 45% in HTS/Rate 2, up from 4.4.% under General/Rate 1 regime.
This is likely to affect trade flows of Norilsk cobalt products, which some sellers and consumers have been avoiding since the start of the Ukraine invasion at the end of February, while others have continued to trade it, sources said.
“At the moment 50% who [were] using Norilsk aren’t using it anymore, and those who are still using it can’t get it,” one trader said.
Cobalt metal prices have been quickly increasing since the beginning of the year, following a sharp rise in 2021. Uncertainty around availability of Russian material has contributed to the bullish uptrend.
Fastmarkets assessed the price of cobalt, standard grade, in-whs Rotterdam at $39-39.7 per lb on Thursday April 7, up by 17% since the beginning of the year.
The price of cobalt alloy grade, in-whs Rotterdam, was at $39-39.8 per lb on April 7.
Assessing the potential effect on market prices, a second trader said: “Other suppliers [of non Russian material] will not hesitate to ask for higher prices because of the lack of competitors.”
“If that happens it’ll support the alloy grade [price], [since] the only substitutions are SMM and Nikkelverk, both of which are in tight supply,” a third trader said.
Russia has one active cobalt and nickel producer, diversified miner MMC Norilsk Nickel, which also supplies platinum group metals (PGMs), precious and minor metals. The company reported 5,000 tonnes of total cobalt sales in 2021 across all products, including non-Russian feed. Market sources estimate Russian cobalt output to be closer to 3,000 tonnes in an average year.
Russia has historically accounted for a single-digit share of total US cobalt imports, but its presence in the US market has been gradually increasing. In 2021, Russian cobalt shipments to the US totaled 823 tonnes, representing 9% of total US cobalt imports, according to Comtrade.
The volume has doubled since 2017, when the country took just over 400 tonnes of Russian cobalt, or 3% of total imports.
US cobalt imports (HS 8105) from all origins totaled 9,288 tonnes in 2021, according to Comtrade.
The bill, which was introduced to the Senate on March 2, suspends the PNTR status that Russia has had in its trade relations with the US since 2012, when the country joined the World Trade Organization. PNTR allows for trading products and goods into the US at lower tariff rates.
The bill leaves a clause open under which the President can ask to maintain previous Rate 1 duties for certain products, although that would require a specific submission to Congress and would take effect 90 days after, unless it is voted down.
Among other metal commodities, certain types of Russian aluminium products will also face a 40% tariff.