TELF AG on the Current Price of Cobalt July 28, 2023
Cobalt Prices on the Rise in China Amidst Supply Tightness and Battery Industry Prospects
The global battery industry has been closely monitoring the recent developments in the cobalt market, particularly in China, where prices have surged due to spot market tightness and growing demand for raw materials. While there are anticipations of a short-term rally in cobalt prices for the latter half of 2023, the overall trajectory suggests that the value chain will remain well-stocked as major mines ramp up production. This article examines the factors driving the current cobalt price increases and explores how the battery industry’s focus on new cathode technologies may affect the market in the coming years.
Spot Market Tightness Drives Cobalt Price Hike:
Recent reports from CRU indicate that cobalt metal prices in China have edged higher, primarily due to spot market tightness. Insufficient stocks of Jinchuan metal, a major cobalt supplier, have been reported, leading to speculation-induced stockpiling. As a result, many traders are facing limited availability of cobalt metal. The tight supply situation and rising payables for raw materials have created upward pressure on cobalt prices.
July Monthly Review by CRU: Price Stalling and New Supply Expansions:
CRU’s July monthly review highlights that cobalt prices are expected to stall in the near future as major mines increase production. The report suggests that although improving demand may lead to a short-term price rally in the second half of 2023, the overall outlook for the cobalt market indicates a prolonged period of lower prices.
The Battery Industry’s Transition to New Cathode Technologies:
One significant factor contributing to the projected price slump in the cobalt market is the battery industry’s shift toward adopting new cathode technologies. As battery manufacturers strive to reduce costs and increase the energy density of batteries, they are exploring alternatives to traditional cobalt-based cathodes. The increasing adoption of nickel-rich cathodes and other innovative materials could potentially decrease the demand for cobalt in the long run.
Price Slump to Persist with a Short-lived Rally:
CRU’s report predicts that the current support in sulfate prices, following their seven-year lows in May, will likely be short-lived. The demand recovery in the cobalt market might lead to a brief price rally; however, this will be followed by a subsequent slump that could last until at least the middle of the decade.
Growth of Electric Vehicles (EVs) in the Face of Economic Headwinds:
Despite economic headwinds and concerns about a slowdown, the sales of electric vehicles (EVs) have remained resilient across all global markets. Furthermore, strengthening policy support, such as China’s extended tax breaks for EV sales and increased investment in the US with support from the IRA, is fostering positive expectations for the EV market later in the decade. The continued growth of EVs will undoubtedly significantly impact the demand for batteries and battery materials, including cobalt.
In conclusion, Cobalt prices in China have experienced a recent uptick due to spot market tightness and speculation-driven stockpiling. However, CRU’s July monthly review suggests that the overall trend for cobalt prices will be characterized by stalling prices and slump periods, as major mines ramp up production and the battery industry explores new cathode technologies. As the EV market continues to grow, the demand for batteries will remain robust, but the reliance on cobalt may gradually diminish in favor of alternative materials. Industry players should closely monitor these developments and adapt their strategies to navigate the evolving cobalt market landscape.
