Cobalt metal prices diverge on demand shifts
Global cobalt metal prices have diverged on a reversal in demand across global markets, with strength now coming from aerospace and alloying applications, and weakness in chemical markets feeding certain types of battery.
The divergence in prices in Europe in the past few weeks has given the clearest example of the trend happening across global markets. On one side, chemical-grade metal prices have fallen to $21.25-22.50/lb duty unpaid in Rotterdam, down from $25.80-26.30/lb at the beginning of the quarter on 3 October. Alloy-grade metal prices have declined but held much firmer, assessed at $23-24/lb on 6 November, down from $25.80-26.80/lb on 3 October. The divergence of the market is more visible looking at the spread between alloy-grade pricing in Europe and metal prices in China. Prices in China are down to 318-345 yuan/kg ($20.67-22.43/lb). Chinese metal has weighed on the bottom end of the European market as Chinese producers have offered material into that market. But in the US, Chinese metal is subject to tariffs, meaning prices have resisted the sharper fall experienced by European chemical-grade prices, remaining at $22-23/lb. There has been disagreement among market participants about the market direction for a number of months, as aerospace-facing traders are more positive about demand, while those selling chemical grades of cobalt see weaker buying interest for their products. There have been reports of much lower sales prices for cobalt metal in the market, which has swayed some sections of the market to lower price expectations in what some traders see as an overreaction. "Chemicals markets are weak, nobody is denying that, but there's a deficit for western-grade cobalt going toward the US market," said one trader. "At year-end there's always a fire sale but it's particularly bad this year because of the macro environment," said another European cobalt trader. The disconnect has fed into long-term contract negotiations this year, with many market participants reporting delays to agreements, especially in the battery chemical-facing sector. One trader said their customer was pushing for an extension to the previous year's contract until the end of the first quarter, to burn down inventories because demand for cobalt sulphate and tetroxide has been so low. Again, in contrast, another trader said an aerospace consumer was looking for an extra 25pc on top of the previous year's contract volumes, indicating strength in the sector. "The wider market is that the alloy guys have been booking, chemical guys have not booked or are delaying," said one trading firm.
Aerospace markets rebound after pandemic
As commercial aerospace manufacturers increase their run rate to meet returning international travel, demand for aerospace-linked metals, including cobalt, is set to increase next year. For instance, hafnium, which is used in several applications alongside alloy-grade cobalt metal, including gas turbines and aerospace alloys, has seen demand increase sharply for contracts next year and spot prices rise in response. Argus' assessment for 99pc grade hafnium with 1pc zirconium rose to $2,220-2,500/kg in warehouse Rotterdam on 8 November, up from $1,800-2,000/kg on 3 November, the highest since Argus' assessment was launched in 2015. Titanium prices too, heavily linked to aerospace demand, have risen this quarter, with the Argus-assessed quarterly TG100 long-term contract price up on 3 October to $9.80-11/kg from $7.80-8.80/kg in the previous quarter. Titanium 6Al 4V ingots in the US, long a bellwether of aerospace market demand, have risen steadily throughout the year to $12.50-13.50/lb fob US producer, up from $8-8.25/lb at the start of the year. The US market accepts only certain brands of cobalt metal, from western producers, which are set to be in short supply next year because of announced supply deals or, in the case of a Norwegian producer, strike action affecting production. Buyers are also becoming more selective about the cobalt they consume, meaning some Chinese and Cuban-linked suppliers are unable to sell into the US market. "ESG policies have gathered apace and that's preventing some of the cheap material from filling those gaps," said one metal trader.
Malaise in Chinese markets lifting
The demand downturn resulting from China's strict Covid-19 policies could dissipate in the coming months, reversing the bifurcation trend within the cobalt market. Since China went into sporadic local lockdowns in March, there has been a sharp drop in demand for electronics batteries and electric vehicle (EV) batteries. While the EV market recovered, the electronics sector recovery failed to materialise, resulting in a swift downturn in cobalt prices in China. A report by the Cobalt Institute put electronics batteries as the second-largest end-use market for cobalt metal in 2021, at 31pc of total consumption, second only to EV batteries, which were at 34pc of overall consumption. After turbulence in recent weeks, though, the Chinese government appears to be easing Covid-19-related restrictions, opening up the prospect of a sharp recovery in these markets. Most market participants believe that there will need to be a period of stock burndown at cobalt chemical and battery producers though, before any real demand can raise cobalt metal prices in China.
Related news posts
Hydro invests in metal recycling plant at Hoyanger
Hydro invests in metal recycling plant at Hoyanger
London, 22 April (Argus) — Norwegian aluminium producer Hydro has invested 240mn kroner ($21.8mn) in a new recycling facility alongside its primary aluminium smelter in Hoyanger, Norway. The recycling plant will process 36,000 t/yr of post-consumer aluminium scrap, as Hydro moves towards its 2030 target of reducing its emissions by 30pc compared with 2018 levels. The new facility will process scrap metal from vehicles, building facades, furniture, packaging and other consumer goods, which will be mixed with primary metal made with renewable hydropower at the Hoyanger plant. Among Hydro's low-carbon aluminium products is the Circal brand of aluminium, which is made with 75pc recycled content, and the Reduxa brand, which is made with renewable energy and generates emissions of less than 4kg CO2/kg aluminium produced. They are key to the company's emission reduction targets and ultimately reaching net zero by 2050. "Recycling is the fastest way to zero. With this new facility, we deliver on our strategy to increase recycling capacity in our efforts to decarbonise our own production processes and make products that the world needs for the green transition," the executive vice-president of Hydro's aluminium metal business, Eivind Kallevik, said. By Jethro Wookey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Baltimore opens third temporary shipping channel
Baltimore opens third temporary shipping channel
New York, 22 April (Argus) — A third temporary shipping channel has opened at the Port of Baltimore to allow more vessel traffic around the collapsed Francis Scott Key Bridge. Located on the northeast side of the main channel, the new passage has a controlling depth of 20-ft, a 300-ft horizontal clearance, and a vertical clearance of 135-ft. When combined with two other temporary channels opened earlier this month the port should be able to handle "... approximately 15 percent of pre-collapse commercial activity," said David O'Connell, the federal on-scene coordinator. The main shipping channel of the Port of Baltimore — a key conduit for US vehicle imports and coal exports — is expected to be reopened by the end of May, the Maryland Port Administration said earlier this month. The bridge collapsed into the water late last month when the 116,851dwt container ship Dali lost power and crashed into one of its support columns. Salvage teams have been working ever since to remove debris from the water and containers from the ship in order to clear the main channel. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
China's Lopal starts first Indonesian LFP battery plant
China's Lopal starts first Indonesian LFP battery plant
Beijing, 22 April (Argus) — Major Chinese lithium iron phosphate (LFP) producer Jiangsu Lopal Tech has launched production at the first phase of its Indonesia-based LFP production plant. The Indonesian plant is the first overseas LFP battery material production project with over 10,000 t/yr capacity that a Chinese company has invested in, Lopal said. Lopal's subsidiary Changzhou Liyuan New Energy Technology started building the first phase of the project in July last year, with a 30,000 t/yr output capacity for LFP battery material. The line started pilot production in March. The plant is located in the Kendal Industrial Park in Indonesia's Central Java province. The whole project has a designed capacity of 120,000 t/yr, with the second phase of 90,000 t/yr likely to start construction in the second half of this year. This project marks a milestone in China's investment in overseas battery feedstock resources, according to market participants. Most Indonesian projects that Chinese firms invest in are for primary materials or intermediates such as lithium salts, graphite, nickel matte, mixed hydroxide precipitate (MHP) and ferro-nickel including nickel pig iron. Lopal has been accelerating its investment in lithium-ion battery material production in the past few years. It is also building a 50,000 t/yr production line for LFP and a 100,000 t/yr plant for iron phosphate in the Shandong Heze Juancheng industrial park, in which another 80,000 t/yr iron phosphate project is located. Changzhou Liyuan on 18 April released its newly-developed 4th generation high compaction LFP cathode material S501, with 2.65g/cm³ of compaction. This has increased the battery's energy density and power load, said the company. LFP has taken up a bigger market share in the power battery market because of its lower manufacturing costs and safer performance. But one of its main disadvantages is shorter driving ranges on electric vehicles because of lower energy density. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
International Graphite gets Western Australia funding
International Graphite gets Western Australia funding
Singapore, 22 April (Argus) — Australia's International Graphite will receive fresh funding of A$6.5mn ($4.2mn) for its graphite project and plans in Western Australia's (WA) Collie from the state government. The Labor party-led government of premier Roger Cook will provide A$4.5mn to support the acceleration of International Graphite's pilot graphite micronising plant in Collie to "full scale", with A$2mn for its battery anode material facility feasibility study, the WA government said on 20 April. International Graphite in February wet commissioned its 200 t/yr graphite micronising plant, having obtained government approval for equipment installation late last year. The facility is a precursor to its planned 4,000 t/yr commercial micronising facility in Collie, which is expected to cost A$12.5mn and could begin construction by mid-2024, the firm said. It plans to build the operations over 18-24 months, the WA government said. The company last year signed an exclusive agreement for a lease related to its Collie graphite battery anode material facility. It is aiming to be the first fully integrated battery anode graphite processing firm in WA. International Graphite owns the Springdale graphite deposit near Hopetoun in WA, the second-largest known graphite deposit in the country. The deposit has a mineral resource estimate of 49.3mn t of 6.5pc total graphitic carbon, according to the firm on 12 September. The Australian federal government last year gave A$4.7mn to International Graphite through its Critical Minerals Development Programme grants. It received the first and second tranche of A$1.7mn and A$1.25mn last year. By Joseph Ho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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