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SPOTLIGHT: Where next for world cobalt prices?


Cobalt metal prices have staged a modest recovery to a low-grade range of $13-80-15.10 per lb, after they plunged to $13.20-14.25 in March, their lowest levels in nearly two years.

But where will cobalt prices move next, after the recent climb

Last month, Metal Bulletin polled cobalt consumers, producers and traders across the globe to reveal where the industry’s key participants forecast prices will move in 2012.

A bearish sentiment prevailed, with a significant majority (88%) of participants expecting prices to remain stable or move down between now and December 2012.

End-of-year price expectations varied greatly across the sector, however, with some participants forecasting a December ceiling of $10 per pound (low-grade low), while others expected a top of $20.

Half the respondents thought low-grade low prices would remain relatively stable for the rest of the year at between $13 and $16.

Around 38% believed that prices would fall below $13 by December. The remaining 12% expected higher numbers by year-end.

The majority of survey respondents believed that although demand is still reasonably strong, too much material is available at present to sustain a rally.

With further supplies expected to come on-stream later in the year, one respondent wrote: “Rallies cannot be maintained”.

The recent price rebound, considered by some sources as sustainable due to strengthening battery demand, has been dismissed by others as no more than a blip in a downward spiral.

What to watch

Trade participants pointed to several factors that might turn the market in 2012.

The timing of the arrival of new supplies to the market, the position of Glencore as a trader or producer, and growing battery demand are among the key drivers of cobalt prices for the remainder of 2012.

Trade participants also drew attention to China, where surplus metal and high stocks dominate discussions, as they did last year. 

Respondents also noted that Chinese concentrate imports dropped dramatically in January, with some expressing concern over future demand.

But strong growth in the battery sector will continue to provide support for prices this year, sources said

Attention will now turn to new production sources due to come on-stream this year.

The timing of the arrival of new production, particularly at Sherritt’s Ambatovy project in Madagascar, will play a key role in defining market sentiment. 

Fleur Ritzema
Twitter: @fritzema_mb

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