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Home Africa

African supply bottlenecks fuel cobalt price surge

Staff by Staff
August 6, 2020
in Africa, Cobalt, Lithium, Mining, Natural Resources
Reading Time: 2 mins read
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Transport delays from South Africa against a backdrop of increasingly robust Chinese demand have fuelled a price rally for cobalt hydroxide, used to make chemicals for electric vehicle batteries.

Chinese cobalt refiners have moved to replenish stocks of hydroxide feedstock as they gear up for a rebound in demand as coronavirus lockdowns are eased.

But COVID-19 lockdowns in southern Africa have created bottlenecks, delaying cobalt shipments from Zambia and the Democratic Republic of Congo, which accounts for over 70% of global supply.

“We are seeing a scramble for cobalt hydroxide in China, (but) buyers are finding it isn’t there,” said Benchmark Mineral Intelligence’s (BMI) head of price assessment Caspar Rawles.

Cobalt from Congo comes in the form of hydroxide which is converted into chemicals for the lithium-ion batteries used in electric vehicles, mobile phones and the aerospace industry.

Cobalt hydroxide prices are typically a percentage of the metal price, known as a payable. According to an assessment by BMI, payables hit levels around 75% in July, their highest in two years, from around 67% last month.

Also read: Electric vehicles are starting to buoy the global Metals Market

Traders said payables had risen even further, to around 85% currently.

Graphic source: Reuters

China dominates the supply chain for electric vehicle batteries, makers of which are struggling to source cobalt products.

Cobalt prices on the London Metal Exchange are at US$33,000 a tonne, the highest since early March and up more than 15% since the end of July, when the price slide due to stalled activity and COVID-19 lockdowns came to an end.

Graphic source: Reuters

However, surpluses are still expected this year, with CRU Group’s George Heppel putting the number at 6,000 tonnes while BMI forecasts an oversupply of around 5,000 tonnes.

Graphic source: Reuters

The September cobalt contract on the Wuxi Stainless Steel Electronic Trading Center – a reference for spot deals in China – is up 20.6% since the end of June at 286 yuan (US$40.95) a kilo.

Graphic source: Reuters

News source: Reuters

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Tags: africaAfrican supply bottlenecks fuel cobalt price surgeBenchmark Mineral IntelligenceCaspar Rawlescobaltelectric carselectric vehicleshydroxidelithium ion batterieslithium-ionLondon Metal ExchangemetalsWuxi Stainless Steel Electronic Trading Centerафрикаأفريقياアフリカ非洲
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