Graphic: Prices tumble for cobalt used for electric vehicle batteries
25/09/2023 12:10
By Pratima Desai
LONDON, Sept 25 (Reuters) - Prices of the cobalt
hydroxide used to make chemicals for electric vehicle batteries
have plummeted due to an upsurge of supplies from top producer
Democratic Republic of Congo.
Cobalt hydroxide is produced in Congo, where it is a
byproduct of copper. Hydroxide prices are usually cited as a
percentage of the metal price known as payables.
According to Benchmark Mineral Intelligence (BMI), payables
in August dropped to 46% of the cobalt metal price compared with
around 90% in late 2021 and early 2022 when cobalt metal traded
around $60,000 a metric ton.
Cobalt is currently trading around $32,000 a ton.
"We're unlikely to see prices return to 2022 levels until
demand is able to catch up with the huge volume of cobalt
available at the moment," said BMI analyst Roman Aubry, who
expects a cobalt market surplus of 17,000 tons this year.
"However, the rate at which the EV industry is going, we
expect demand to overtake supply quite substantially in 2027."
Soaring production from Indonesia where cobalt is a
byproduct of nickel is also adding to surpluses.
BMI estimates cobalt supplies from Indonesia will more than
double to above 19,000 tons this year from last, while those
from the DRC will rise more than 14% to 169,000 ton or 72% of
the global total at nearly 223,000 tons.
Congo supplies have been boosted by the resumption of cobalt
and copper shipments from China's CMOC Group 603993.SS Tenke
Fungurume mine (TFM) in July, after a one-year stoppage caused
by a dispute with the government.
Demand meanwhile is growing, but not as quickly as supplies,
partly because of weakness in sales of consumer electronics such
as mobile phones and laptops which use cobalt-containing
batteries.
Also a headwind is a switch to cheaper lithium iron
phosphate (LFP) batteries and away from those that use nickel,
cobalt and manganese (NCM) cathodes, where cobalt content is
also being reduced in favour of nickel to improve the driving
range.
"These developments pose long-term challenges to cobalt
demand," analysts at Morgan Stanley said in a note. "We see
cobalt prices remaining under pressure as supply growth and CMOC
destocking come through."
Morgan Stanley expects to see cobalt market surpluses of
47,061 tons this year, 74,800 in 2024 and 92,660 in 2025.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Cobalt market balance https://tmsnrt.rs/3PmZI4Q
Cobalt prices https://tmsnrt.rs/3ZsINCy
Cobalt supplies https://tmsnrt.rs/456HTgv
Electric vehicle battery chemistry https://tmsnrt.rs/3LBC3N1
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(Reporting by Pratima Desai; Editing by Bernadette Baum)
((pratima.desai@thomsonreuters.com; +44 207 513 5681;))