Weekend summary and future outlook for cobalt

-

The demand for cobalt grew rapidly over the past decade due to the increase of lithium-ion batteries in electric vehicles, smartphones and other electronic devices. Cobalt is a key element of these batteries. In addition, cobalt is also used in aerospace and defense applications, as well as in medical implants.

However, in recent years, the cobalt market has faced a series of challenges and opportunities that have led to abrupt changes in prices and investment in the sector. Cobalt is a relatively expensive and scarce mineral and reducing its use in batteries can help to lower costs and increase supply chain sustainability. This was particularly evident in 2018 when a surge in supply from the Democratic Republic of Congo (DRC) cooled the market while at the same time, Elon Musk of Tesla voiced serious plans to drastically reduce the need for Cobalt in their EV batteries.

Fast forward to 2021. A combination of major supply chain bottlenecks due to the covid pandemic and at the same time rising demand for consumer electronics sent the prices for cobalt skyrocketing.

 




In 2023, According to the Trading Economics Website, cobalt prices have decreased by over 31 per cent since the beginning of the year. Currently, cobalt futures traded on CME are traded at $35,395 a tonne for delivery in March. The metal’s prices have dropped 57 per cent from the peak of $81,837 witnessed in May last year.

In China, prices of cobalt sulfate from which cobalt is derived have dropped following a fall in the rates of refined cobalt and its intermediate products. This is one of the reasons for the sharp decline in the metal’s price.

According to a recent article By Thomas Biesheuvel and Mark Burton,

“Cobalt rallied sharply early in 2022 as demand for electric vehicles surged. But while automotive usage is still rising, there’s been a sharp drop-off in buying from another key sector — Chinese electronics — and cobalt prices have crashed more than 50% since a peak in May.”

The question is: Will the price of cobalt continue its decline as a consequence of the Chinese electronics decrease in demand, or can another wave of EV demand offset this effect?


Comments

  1. Kristine@tronnes.netFebruary 22, 2023 at 2:01 PM

    Very interesting! What are your forecast for the spot price/ cobalt futures in May?

    ReplyDelete
  2. Christian HornnesFebruary 27, 2023 at 2:19 PM

    Our forecasted price for cobalt in May is $30 000

    ReplyDelete

Post a Comment

Popular posts from this blog

Despite the first increase in cobalt prices in six months, the future price projection of cobalt remains bearish.

-
Image
  For the past few years, the cobalt market has been plagued by a surplus, resulting in a downward trend in prices. Nevertheless, the price of cobalt recently increased slightly, rising from USD 34,180 per ton to USD 34,930 per ton, marking the first upward movement in six months. The price increase was caused by market participants restocking cobalt metal as well as a small increase in demand in the United States.                                                           Cobalt price in USD/per ton over the last 6 months. Source: TRADING ECONOMICS   Despite this short-term price increase, the cobalt price outlook remains bearish. The primary reason for this is a market oversupply of cobalt, which has resulted in inventory buildup. Supply is expected to increase by 24% overall ...
Read more

Copper prices hit 7-week high on easing banking crisis and weaker dollar

-
Image
                      London Financial Hub, United Kingdom. Credit: https://www.bu.edu/gdp/. Photo by: João Barbosa via Unsplash. Copper prices have risen in recent weeks, reaching a seven-week high due to a variety of factors. The price ends the week at $4,12 per pound according to TradingEconomics. The easing of the banking crisis, which has strengthened investor confidence and led to greater demand for commodities such as copper, is one of the key drivers of this boom. Simultaneously, a weaker US currency has led to increased pricing, making copper more appealing to international buyers. Low inventory quantities at the London Metal Exchange (LME) have also contributed to the spike in copper prices, fueling concerns about supply shortages. This has resulted in increased trading activity, sending prices even higher. The copper inventory volumes ended up at 56 800t, the lowest it has been since 20...
Read more

How the Collapse of Several US Banks Affected Copper Prices

-
Image
  Copper prices have been falling for months due to various factors such as China's economic slowdown, inflation and interest rates. However, this past week saw a dramatic drop in copper prices after two major US banks collapsed, triggering a wave of panic and uncertainty in the financial markets. The banks that failed were Signature Bank and Silicon Valley Bank, both of which catered to the tech industry and had large exposure to risky loans and investments. The banks faced a bank run as depositors withdrew their money en masse, leading to a liquidity crisis that forced regulators to close them on March 12. This was the first time since 2008 that a US bank with more than $10 billion in assets was shut down by regulators. The collapse of these banks had a ripple effect on the global economy, as they were connected to many other financial institutions and businesses. The stock market plunged, credit markets froze and investor confidence plummeted. Copper prices also suffered as trad...
Read more