European cobalt prices have stabilised since early December, with traders and producers anticipating a sharp rise in demand in the first quarter of 2020.
Chemical grade prices were assessed unchanged this week at $15.75-16.30/lb in-warehouse Rotterdam and alloy grade prices were assessed at $16.30-16.80/lb in-warehouse Rotterdam. Prices have been falling from $18/lb in early-November.
Some offers were noted below $15/lb for chemical grade material last week but no deals were confirmed at that level, and mainstream price indications remained slightly higher.
There have already been signs that consumers will enter the market for large amounts of material in January. This week, traders reported more enquiries than in the previous two months. One trader said they received enquiries for over 300t of metal, both alloy and chemical grade.
There were large volume deals concluded for January delivery. One deal for 20t of broken cathode material was concluded at $16.15/lb and there were several deals for alloy grade metal above $16.50/lb.
European traders said enquiries from the US market have increased after the US congress approved a large investment in aerospace as part of a larger defence spending bill. The bill is expected to increase demand for alloy grade cobalt for use in superalloys for aerospace applications.
The metal market in Europe is well supplied this month, but that is expected to change in January as purchasing decisions are made and consumers enter the market for material. Political and economic uncertainties that hampered the market in the second half of 2019 are clearing.
A solution to a political logjam in the UK looks imminent, removing uncertainty surrounding trade barriers and regulation between the UK and EU car markets for at least the next year. This will give carmakers the confidence to make long-term purchasing decisions for a year in which many of them are due to begin production of flagship electric vehicles. The roll-out of 5G in Europe also promises higher demand for new smartphones, a market which stagnated in 2019.
The closure of Switzerland-based trading firm Glencore's Mutanda mine in the Democratic Republic of Congo (DRC) is also expected to create tighter supply of hydroxide, raising the cost of an essential metal feedstock, which only integrated metal producers will be able to absorb. A rise in hydroxide prices would raise costs for many metal producers in China, which have to purchase it from producers in the DRC.
By Thomas Kavanagh
