First, economic recovery, cobalt demand surge
In 2020, the price of cobalt was surprisingly stable due to the epidemic. Cobalt prices have been notoriously volatile in the past. Demand and prices for cobalt, a key ingredient in power batteries, have soared as the global epidemic has improved, sales of electric vehicles have surged and global efforts to cut carbon emissions have intensified.
The average cobalt price rose to 357,000 yuan per ton for the fourth consecutive trading day, hitting a new high since mid-April, according to data from Changjiang Nonferrous Metals Network. Overseas, MB standard level cobalt prices nearly a week up 4%. The global cobalt market is turning its back on the previous downturn and beginning to "lift its head".
The current global cobalt market is about 127,000 tons, and demand is expected to jump 18 percent to 23,000 tons this year compared with 2019 due to surging sales of electric vehicles, according to the agency. The cobalt market will also shift from last year's surplus to this year's shortage.
Glencore will restart its largest copper-cobalt mine
Mutanda is the largest cobalt mine in the world and one of the most important copper mines in the world. The output of copper and cobalt is maintained at around 200,000 tons and 25,000 tons. The mine is one of Glencore's key assets in Congo. Mutanda accounted for one-fifth of global cobalt production in 2018, according to Darden Commodities Ltd, a UK-based company specializing in cobalt production.
Cobalt supplies surged in 2019, sending prices down more than 40% for the year. After cobalt prices fell sharply, Glencore announced it was suspending production at the Mutanda mine from November that year because it was "no longer economically viable".
As the electric vehicle industry grows, Glencore expects the Mutanda mine to add about 20,000 tonnes of cobalt a year to the market as it restarts.
3. Future trend: Cobalt production of 4 Mutanda may be required
1. Demand side analysis
Demand for cobalt is set to grow at a compound annual rate of 7 per cent through 2030, thanks to the global adoption of electric vehicles and healthy medium-term demand for portable electronics during the rollout of 5G technology. To balance the market, experts believe that new supplies equivalent to four "Mutanda" will be needed by 2030. On the other hand, in the short term, it is more cobalt-free than cobalt-free. Cobalt consumption will maintain a growth rate of 10%-15%, and cobalt supply will be tight in 21-23 years.
2. Supply-side analysis
The cobalt supply is highly concentrated and Glencore has the absolute say. The DRC is home to most of the world's available cobalt resources, accounting for 70 percent of global cobalt production in 2019. The top ten cobalt mining companies account for 75% of the global output, among which Glencore accounts for more than 30%, and has the absolute right to speak.
To sum up, the cobalt market news, but there is no decisive news to support the cobalt market up or down. Looking at the capital market, with the resumption of global work and production, the flow of capital is more inclined to the resumption of work and production related industries, and the investment funds in the cobalt market are difficult to drive the sharp rise and fall of cobalt prices, so the recent trend of the cobalt market is mainly stable.
