Cobalt prices jump higher as enquiries turn into business

21 October 2009 12:53  Published by samjiefu@gmail.com

Cobalt prices moved up again on Wednesday as traders and producers were able to turn some of the new enquiries they are fielding into business.

Low-grade cobalt rose to change hands at $16-17 per lb from $15.40-16 last week, while high-grade climbed to $17-18.50 from $16.50-17.50.

"Volumes last week began going up," one trader, who sold Russian material at $16.80 per lb, said.

"There has been a 10-20% uplift in prices, initially inspired by traders on the back of speculative Chinese enquiries," he added.

But he preached caution. Despite having sold high-grade metal at $18.80 per lb on a delivered works basis in China, he said: "It's all going on in the $16-18 range, but at the top end it's all very quiet."

A second trading source said that the move up in prices last week caught some consumers out.

"It's a classic situation. There is pent-up demand from consumers, but they always miss the boat. They wait for the market to bottom, but by the time it has, it's too late," he said.

There are many hundreds of tonnes of enquiries for metal in the market to cover the end of this year and 2010, he said.

"The reality is there's not much metal out there and the chemicals and battery sectors are going well," he said, predicting that prices will trade in an $18-20 range in November.

A producer source agreed. "Batteries are doing pretty well in Japan and Korea," he said. "But it's all really a question of supply."

To illustrate the problems traders and consumers face in obtaining material, many pointed to Kasese's continuing absence from the market; the fact that Chambishi has not yet restarted; BHP Billiton's withdrawal from the spot market; and to reports from other market participants that Sherritt is sold out of spot material till December.

But one consumer source was sceptical about what is driving the higher prices.

"The market still seems to be moving up but, to my feeling, for the wrong reasons," he told MB. "Demand for end products remains significantly depressed."

The bearish factor of overall supply rising on higher production from sources such as Freeport McMoRan's Tenke Fungurume mine in the Democratic Republic of Congo is also being ignored.