When it comes to tools, superalloys, magnets and batteries, cobalt is a key material used in manufacturing products we need in our daily lives. Purchasing this metal at an acceptable price and answering consumer demand can influence a manufacturer’s operations now and in the future. When looking at the price market, there has been drastic price fluctuations, as companies are wondering if this trend will continue or if rates will soon stabilize.
Cobalt’s Previous Price Surge
We are a long way from the high prices back in 2017 for this metal. Throughout every quarter, cobalt prices rocketed skyward as there was a 129% surge, according to Mining.com. One of the main reasons attributing to this price surge was the fears of the tariffs between the United States and China. Investors purchased cobalt in large quantities for their warehouse so they could weather through the trade war.
At the end of 2017, cobalt prices went up to $75,500 a ton on the London Metal Exchange (LME) as it continued to trend high and peak in April of 2018 at about $100,000 a ton. In the United States, cobalt metal as a little over US$40/lb.
Cobalt Market Crash
However, this upward trend began a downward spiral for the remainder of 2018. Cobalt prices crashed for a two-year period. At the end of 2018, the price for cobalt on the LME went down to $32,000 a ton. Due to the oversupply of cobalt in warehouses by investors and no long-term projects set up to increase demand for the metal, prices in the United States declined to US$26/lb at the beginning of 2019. By March 2019, cobalt prices hovered around US$14/lb and experienced a slight rebound in April at US$18.50/lb.
Prices Continue to Fluctuate, But Expected to Recover
The volatility of prices for cobalt continues due to a range of circumstances happening in several countries. Buyers of cobalt, especially those in China, are only expected to purchase cobalt for spot deals. This may keep prices depressed for a time. On the other hand, prices are also expected to see a positive increase based on the battery demand in the electric vehicle market.
Another change which may impact the cobalt market involves mining production occurring in Africa. The Democratic Republic of Congo supplies most of the cobalt to the world. Artisanal mining took off and experienced exponential growth for several years, then declined due to lower cobalt prices. Industry experts expect demand to rise again with mines increasing their cobalt output.
In addition, prices are expected to recover due to the LME instituting new bans on illegal mining happening in the Democratic Republic of Congo. The LME plans to push out an initiative to delist any cobalt brands that have not been responsibly sourced, according to Investing News Network. These delisting and ban initiatives will follow an assessment period based on the new LME rules by 2022.
Another factor to watch out for in the coming years that may influence the cobalt market involves vehicle manufacturers looking for battery chemistries that do not use as much cobalt. However, this lab work may take years, as electric vehicle manufacturers still expect cobalt supplies to accelerate ten-fold into 2025.
While there are several supply changes that will be occurring from 2019 into 2025, demand will play the most deciding factor on the future price fluctuations of cobalt metal. Whether new battery technologies will reduce demand, or the increase of electric vehicles and the need for cobalt will rise, will have to be watched for in the coming months to determine the future of this important metal.