Cobalt prices enter 2021 on the rise

Europe's cobalt market is seeing a brisk start to 2021 with prices rising amid high demand from Chinese chemical producers and European traders looking to cash in on a robust demand outlook for the year.

European prices for alloy and chemical grade cobalt metal increased to $15.75-16.50/lb duty unpaid Rotterdam yesterday, up from $15.60-16.20/lb on 31 December. A European trader concluded two sales yesterday, each for 20t of alloy grade cobalt metal to Chinese buyers, at $16.50/lb and $16.30/lb, respectively. Another deal for 1t of briquettes was struck between two European traders at $16.10/lb. Meanwile, one European trader offered 2t of broken cathode to a buyer in China at $16.25/lb and another 5t of briquettes to another European trader at $16.40/lb.

"The tinderbox was set last year and now it is lighting," a European trader said. One Japanese producer commented that the market had been building up to a "radical" reaction in January because of how high Chinese hydroxide prices have risen. Prices for cobalt hydroxide were assessed at $12.50-13.20/lb cif China on 5 January, having risen by 28.5pc in the second half of 2020 from $9.60-10.40/lb on 7 July amid robust demand.

Chinese imports of cobalt intermediates declined by 0.6pc year on year to 234,097t in 2020, but imports of hydroxide in October were up by 14pc on the previous year at 34,438t, the most recent trade data indicate.

Electrification driving demand

Despite the Covid-19 pandemic 2020 turned out to be a transformative year for electric vehicle (EV) demand and investment, major US producer Tesla fell just shy of its original target of 500,000 vehicle deliveries in 2020, hitting 499,550 in a year that forced it to suspend operations in Shanghai and California during the pandemic's first wave.

Chinese EV producers also achieved sales growth last year. Nio saw its sales rise by 113pc in 2020 to 43,728 vehicles. BYD — China's largest EV producer — suffered an 11pc drop in EV sales to 130,970 units in 2020 amid a 7.46pc fall in total car sales, but it rebounded in December with a 150pc year-on-year jump in EV sales to 27,594. EV sales in China are expected to increase in 2021, although Beijing has confirmed it will go ahead with plans to reduce subsidies on them by 20pc in 2021.

In Europe, the market share for EVs in the third quarter of 2020 rose to 9.9pc, up from 3pc in the same period of 2019, data from the ACEA show. Registrations of EVs in Europe rose by 211pc to 273,809 in the third quarter. In the UK, demand for EVs grew by 186pc to 108,000 units in 2020. With the launch of a number of flagship EVs this year and Tesla Berlin beginning operations in July, the European market is expected to continue rapid growth, encouraged by subsidies and tax incentives in most countries in the region.

By Thomas Kavanagh