Cobalt prices fall on easing supply, stable demand

  • Market: Metals
  • 09/04/21

European cobalt prices have fallen since mid-March amid an anticipated easing of supply bottlenecks and stabilising demand from the battery chemical industry.

Rotterdam prices for alloy grade cobalt metal were assessed at $22.50-23.80/lb yesterday, down from $24.50-25.20/lb on 1 April. Prices for chemical grade metal were assessed down at $22.80-24.15/lb from $24.80-25.40/lb over the same period, maintaining a slight premium to alloy grade metal.

Some traders saw the Easter holiday period as a good time to draw down positions and take profits on a first quarter that saw cobalt prices rise by more than 57pc. One trader still achieved a sale at $24.15/lb earlier this week and some have maintained offers above $24/lb, but most bids, offers and deals are now hovering in a range of $22.50-24/lb across both grades.

The market has "found the floor", a trader said, confident that another round of purchasing would probably push prices back up. "We have transitioned from seller to buyer this week," he said.

Seaborne prices for cobalt hydroxide — which underpinned the first-quarter metal price hikes — have drifted down in the past three weeks, last assessed at $22-23.10/lb cif China on 6 April, down by 4pc from $22.80-24.20/lb cif on 16 March. Some Chinese cobalt smelters have reduced their operating rates in recent weeks amid flat demand for metal and relatively high hydroxide prices. Chemical producers that convert hydroxide resisted higher prices, having reduced their own offer prices to attract sales.

Supply bottlenecks easing

Market participants said they expect bottlenecks along cobalt supply routes to ease this quarter. High shipping costs, busy, socially-distanced ports in Africa and haulage issues at borders have caused sporadic delays over the past year for hydroxide producers.

Large producers in the Democratic Republic of Congo (DRC) said they saw no further issues shipping to China, although they admitted some smaller producers may have more trouble because of lower-tier relationships with shipping lines. Traders moving material from DRC said ships that rushed to Asia to take advantage of higher freight rates are likely to be more evenly distributed in the second quarter. Frenzied demand for shipping out of Asia led to higher ship purchases in the first quarter.

New and old cobalt suppliers have entered the market in recent weeks. Sumitomo's Ambatovy announced a return to operations last week after a full year's suspension on 26 March 2020. Ambatovy has a nameplate cobalt metal capacity of 5,600 t/yr, producing briquettes for the chemical market. In mid-March, Wanbao Mining in DRC produced its first cobalt hydroxide. It aims to ramp up hydroxide output to 5,000 t/yr. Additionally, cobalt that was shipped during the tight early first quarter is now arriving at Chinese ports, easing the flow of hydroxide to chemical producers.

Sustained long-term demand

The beginning of the second quarter has seen demand from Asia's chemical producers stabilise, although market participants expect a further round of purchasing to lift the market in May.

China's electric vehicle (EV) market has continued to grow. March EV sales totalled 226,000 vehicles, up by 240pc on March 2020 and by 105.5pc from a month earlier, according to CAAM. Battery vehicle sales were up in the UK year on year by 88.2pc to 22,003, up from 11,694 previously, according to the SMMT. The EU has yet to report March registration figures, but the trend in the UK is expected to continue in Europe. The long-term demand outlook in the US looks more secure too, as the administration of President Joe Biden invests in the US EV market.

A gradual shift away from cobalt by Chinese EV makers could be a limiting factor to rising demand. China's second-largest battery producer yesterday committed to non-cobalt blade batteries. Blade batteries use lithium-ion-phosphate (LFP) cathode technology. Others, such as CATL — China's largest battery maker — have also been drifting towards LFP technology for their mass market batteries, although these are mainly used in shorter-range vehicles.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
22/05/24

ThyssenKrupp Schulte to close seven sites: sources

ThyssenKrupp Schulte to close seven sites: sources

London, 22 May (Argus) — ThyssenKrupp Schulte will close seven sites as part of its restructuring drive, market sources told Argus today. The company will close stockholding warehouses in Braunschweig, Rheine, Munich, Nuremberg, Freiberg, Mannheim and Frankfurt, according to multiple market sources. Last month the company said it would be closing sites and cutting around 450 jobs, but did not reveal which sites would be affected. "Fundamental structural adjustments are necessary to better respond to market changes in the future", the company said when it announced the restructuring, citing declining materials demand and increasing demand for materials-related services. All the impacted locations are stockholding sites and do not provide additional processing. ThyssenKrupp Schulte is part of ThyssenKrupp Materials Services and distributes stainless, carbon and non-ferrous metals from around 40 locations. A ThyssenKrupp Materials Services spokesperson said it could not comment on the affected locations, as "discussions with the respective co-determination bodies have only just begun and the details of the transformation are the subject of these discussions". "At ThyssenKrupp Schulte we are aiming to transform the business model in order to increase the company's profitability and enable Schulte to respond even better to changing customer needs," the spokesperson added. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more
News

Japan’s Kobelco to shut basic oxygen furnace, build EAF


21/05/24
News
21/05/24

Japan’s Kobelco to shut basic oxygen furnace, build EAF

Tokyo, 21 May (Argus) — Japan's Kobe Steel (Kobelco) will close one of the two basic oxygen furnaces (BOFs) at its Kakogawa steel works, looking to replace it with an electric arc furnace (EAF). Kobelco will invest ¥300bn ($1.9bn) to accelerate reducing greenhouse gas emissions by introducing a new EAF, the company said on 20 May as part of its mid-term strategy for the 2024-26 fiscal years. This will result in a closure of a BOF at Kakogawa. It will finalise the decision for introducing an EAF in the early part of its 2024-26 mid-term strategy period, Kobelco said, aiming to start producing crude steel with scrap metal sometime during the 2030s. Kobelco produced 5.9mn t of crude steel during the 2023-24 fiscal year ending 31 March, down by 3.5pc from the previous year. It forecasts producing around 6mn t during 2024-25, according to data separately announced by Kobelco on 9 May. The company did not disclose the production of each BOF at Kakogawa. This is the latest major Japanese steel firm that specialises in BOF production to announce proposed EAF operations, following Nippon Steel and JFE. Nippon Steel started commercial operations in 2022, while JFE plans to start in 2027. Kobelco's switch to EAF production will lead to further concerns about scarcity of scrap in Japan . The supply shortage could be as high as 5mn t in 2030 and 11mn t in 2050, according to a 2022 report by the country's trade and industry ministry. By Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Southeast Asian steel demand to rise in 2024: Seaisi


21/05/24
News
21/05/24

Southeast Asian steel demand to rise in 2024: Seaisi

Shanghai, 21 May (Argus) — The Southeast Asia Iron and Steel Institute (Seaisi) estimates that southeast Asian countries' steel demand will grow by 3.7pc from 2023 to 76.5mn t in 2024. But the growth rate fell below previous expectations considering high global inflation risks, volatile prices and a demand slowdown in China and many other regions, the institute said at the 2024 Seaisi conference in Vietnam held over 13-16 May. Steel demand in the six major countries of the Association of Southeast Asian Nations (Asean-6) fell by 1.9pc from 2022 to 73.5mn t in 2023, Seaisi said. Asean-6's steel production also dropped by 2.1pc on the year to 49.4mn t in 2023, in line with contracting demand. Asean-6's net imports slid by 1.3pc on the year to 24.3mn t in 2023. Lower external demand, high inflation and interest rates as well as tightening global financial markets were the main reasons for steel industrial setbacks last year. It led to a slowdown in construction sectors and steel industrial destocking activities in the region. Steel demand in Malaysia, Philippines and Vietnam fell by 14pc, 7.5pc and 4.8pc respectively in 2023, weighing on regional industrial performance although demand rose by 18pc in Singapore and 6.3pc in Indonesia, Seaisi said. Thailand's steel demand edged down by 0.1pc in 2023. Asean regional steel demand was expected to increase in 2024 because Asean-6 governments were optimistic about achieving their economic growth targets, given strong private consumption in most countries, the rolling out of infrastructure and construction projects, a recovery in tourism and electronics, and as inflation rates move towards targeted ranges. But the region will continue to experience challenges from supply chain uncertainties on the back of escalating geopolitical tensions and wars, weakening Asean currencies except for the Singapore dollar, economic slowdowns outside of Asean, volatile commodity prices, and extreme weather, Seaisi said. Seaisi did not provide a forecast for regional steel production in 2024, but it sees steel capacity expansions in the region leading to overcapacity issues. It expects Asean-6 crude steel capacity to rise from 78mn t/yr in 2022 to 94mn t/yr in 2024. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Roy Hill's WA iron ore loadings support WA exports


20/05/24
News
20/05/24

Roy Hill's WA iron ore loadings support WA exports

London, 20 May (Argus) — Iron ore shipments by the four largest producers in Western Australia (WA) rose in the week to 18 May on the back of a rebound of Roy Hill's volumes as the company completed routine quarterly maintenance. Rio Tinto's shipments ticked up too despite a derailment on its rail line. The four largest Pilbara iron ore producers — BHP, Fortescue, Rio Tinto and Roy Hill — loaded vessels with a combined capacity of 17.10mn dwt, up from 16.63mn dwt in the week to 11 May. The dwt capacity is the maximum capacity of a vessel and overestimates actual shipments by about 5pc. Rio Tinto's shipments reached 6.14mn dwt from 5.81mn dwt the previous week. This is below the 2024 average of 6.44mn dwt.There was a derailment on the rail line heading to Rio Tinto's Dampier facilities last Monday. "We have reopened our dual train line 80km from Karratha following a rail incident on Monday, with the first train travelling on one of the repaired lines on Friday and the second line reopening on Saturday," the company said. Roy Hill's exports jumped to 795,000 dwt from 208,000 dwt the previous week as the company appears to have completed its quarterly maintenance. But the volumes remain below the average of 1.25mn dwt. BHP's volumes ticked down to 5.88mn dwt from 6.22mn dwt the previous week. Fortescue's iron ore loadings edged lower to 4.29mn dwt but were still well above the rolling average of 3.74mn dwt. Overall iron ore shipments from WA increased to 48.95mn dwt during the 1-19 May period from 47.81mn dwt in the same period last year, provisional shipping data indicate. Shipments to China rose to 42.27mn dwt from 39.51mn dwt across the same timeframe. Spot freight costs have stepped down in recent weeks as demand has decreased. Capesize freight rates — for loading on 4-7 June — on the bellwether WA to north China route fell to $10.40/t today from the most recent peak of $11.95/t on 8 May. By Andrey Telegin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

India's JSW Steel to buy coking coal firm in Mozambique


20/05/24
News
20/05/24

India's JSW Steel to buy coking coal firm in Mozambique

Singapore, 20 May (Argus) — India's JSW Steel will buy a coking coal company in Mozambique to secure supply of the key steelmaking raw material and shield against any volatility in prices. JSW Steel's board of directors approved the acquisition of coal mining firm Minas de Revuboe (MDR) for about $74mn. The purchase of a 92pc stake in MDR gives JSW access to more than 800mn t of premium hard coking coal reserves in Mozambique, the steel producer said on 17 May. MDR's mine is not yet operational but the company aims to start developing the mine in the 2024-25 fiscal year. "This is not only going to provide us some cushioning with respect to the highly volatile [premium low-volatile (PLV)] index," said JSW Steel's chief executive officer Jayant Acharya. "It also is logistically closer to India, and therefore, will give us an optimised cost." Fluctuations in prices of high-quality seaborne coking coal have been a concern for Indian steelmakers, as they work to ramp up production in anticipation of rising demand from the infrastructure and automobile sectors. The Argus -assessed Australian PLV hard coking coal price crossed $600/t in March 2022, following the start of the Russia-Ukraine conflict. It was at $237/t on 17 May, a decline of $8/t from the start of this month, owing to ample supplies and thin buying interest. JSW Steel's fourth-quarter profit fell by 64pc to 12.99bn rupees ($156mn) because of higher coking coal costs. Crude steel production in the quarter rose by 3pc on the year to 6.79mn t, while sales totalled 6.73mn t, also registering a growth of 3pc from last year. The company also expects capital expenditure at 200bn rupees ($2.4bln) in the 2024-25 fiscal year, as it adds to its steelmaking capacity. JSW Steel is targeting a production capacity of 50mn t/yr by the 2030-31 fiscal year. The company expects steel demand to pick up in the coming year, citing the government's infrastructure push and robust economic growth in India. By Amruta Khandekar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more