09/08/2021 | News release | Distributed by Public on 09/08/2021 04:54
Tightening feedstock supplies and robust demand from the electric vehicle (EV) battery sector have bolstered cobalt prices since the start of this year, which market participants expect to support prices for the rest of this year.
Argus' year-to-date average Chinese prices for 99.8pc grade cobalt metal rose by 34.7pc to 349.90 yuan/kg ($54/kg) from a year earlier. The average price for 99.8pc chemical grade du Rotterdam also increased by 42.3pc over the same period to $22.40/lb. The low end of the 30pc minimum cobalt hydroxide assessment was averaged at $19.06/lb cif China as of yesterday, up by 92pc from a year earlier.
Combined output of cobalt feedstocks from global key producers including Switzerland-based Glencore, China's CMOC, Brazil-based Vale, Canada-based Sherritt, China's Jinchuan Group and Metallurgical Corp of China (MCC), reached 28,163t in this year's first half, up by only 1.6pc compared with a year earlier.
Glencore, the world's largest cobalt feedstock producer, produced 14,800t of cobalt in this year's first half, up by 3pc compared with a year earlier. Its output comprised 13,000t from Katanga in the Democratic Republic of Congo (DRC), 600t from the Sudbury and Raglan mines in Canada and 1,200t from the Minara site in Australia.
Glencore suspended its production at the DRC's Mutanda mine at the end of 2019 following a significant fall in cobalt prices. It boosted Katanga's cobalt production by 40pc to 23,900t in 2020. The firm's cobalt production peaked at 46,300t in 2019 but fell to 27,400t in 2020 because of the Mutanda shutdown. Mutanda, which produced 25,100t of cobalt feedstock in 2019, is trying to resume full capacity at the start of 2022, with a 1,100t output in the first half of 2021. It has raised its 2021 cobalt production guidance to 35,000t +/-3,000t from 35,000t +/-2,000t previously.
The world's second-largest cobalt feedstock producer CMOC produced 7,010t of cobalt during January-June, up by 7.15pc from a year earlier in line with steady output growth at its Tenke Fungurume copper-cobalt mine (TFM) in the DRC.
CMOC produced 15,436t of cobalt from TFM in 2020, down by 4.11pc from 16,098t in 2019. The firm in February raised its cobalt production guidance to 16,500-20,100t for this year, up from 14,000-17,000t in 2020, considering a scheduled rise in its TFM output by August that was delayed by the Covid-19 pandemic in 2020.
Cobalt feedstock producer Vale produced 1,465t during January-June, up by 19.3pc compared with a year earlier. Vale in March this year said its subsidiary Vale Canada has concluded the sale of its stake in Vale New Caledonia to the Prony Resources New Caledonia consortium. The consortium of investors, including trading firm Trafigura, comprises a majority and non-dilutable shareholding for New Caledonian interests.
Moa Joint Venture, 50pc held by Sherritt and 50pc by Cuba's General Nickel, produced 1,906t of cobalt in the first half of 2021 in Cuba, up by 16pc over the same period of last year. Its guidance for 2021 cobalt production was 3,300-3,600t against output of 3,370t in 2020.
Jinchuan's Ruashi operation in the DRC produced 1,447t during January-June, down by 45pc compared with 2,635t a year earlier. Its output was 4,158t in 2020.
MCC's Ramu NiCo produced 1,535t of cobalt in the first half of 2021 in Papua New Guinea, up by 12pc from a year earlier against output of 2,941t in 2020.
Europe-based ERG is also on track to expand its output, while there are limited changes in production from Russia-based Norilsk, China-based Wanbao Mining and Huayou cobalt and Japan-based Sumitomo Metal Mining.
Tighter feedstocks supplies coupled with low efficiency because of civil unrest in South Africa's Durban port, the key transit hub for supplies from the DRC, have also boosted cobalt prices this year.
Demand from the downstream lithium-ion battery industry is buoyant, while consumption from other sectors including super alloys and cemented carbide is recovering from the effects of the Covid-19 pandemic.
China's output of power batteries rose to 92.1GWh during January-July, up sharply by 210.9pc compared with the same period last year, while installed volumes surged by 183.5pc to 63.8GWh over the same period. Domestic new energy vehicle (NEV) output rose to 1.504mn for January-July, up by 195.6pc from a year earlier, with sales rising by 197.1pc to 1.478mn units. Demand from the EV industry is expected to remain robust in the coming few years with an accelerated transition to a low-emissions society.
Total NEV sales in Europe rose by 157pc to 1.029mn during January-June, according to data from the European Automobile Manufacturers Association.
Demand from the computer, communication and consumer electronics sectors held firm during January-July, although these sectors showed signs of weakening in the second quarter. Chinese mobile phone shipments increased by 15.6pc from a year earlier to 203mn units during January-July, including 150.6mn of 5G phone shipments, which rose by 94.3pc on the year, according to the China Academy of Information and Communications Technology.