Power Up: Cobalt Crash
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Aug 22 -Andy Home, Senior Metals Columnist
Welcome to Power Up. Today we look at cobalt, another battery metal in crisis. Prices have sunk to eight-year lows and established producers are feeling the margin pain but supply simply keeps on growing.
Also in today’s issue, Germany’s fading wind momentum, Europe’s full gas storage and have China’s oil imports peaked?
Cobalt In Crisis
Cobalt prices have crashed over the last two years and are now trading around eight-year lows. It’s the latest downswing in a long history of boom-bust cycles for the battery metal.
Like other battery metals such as lithium, cobalt is suffering from slower-than-expected growth in the Western electric vehicle sector. An additional headwind comes from a new generation of batteries using lithium-iron phosphate chemistry and zero cobalt.
It’s not as if demand has stopped growing at all. Adamas Intelligence estimates some 5,000 tons of cobalt were deployed in new energy vehicle sales in May, a year-on-year increase of 12%.
It’s just that global supply is rising much faster thanks to rapidly expanding capacity in the Democratic Republic of Congo and Indonesia. Cobalt is mined as a byproduct of copper and nickel respectively in those two countries, meaning the sensitivity to low prices is limited.
The market is in surplus and expected to remain so for the next couple of years at least, according to Glencore CEO Gary Nagle. The company, which was last year overtaken as the world’s largest producer by China’s CMOC Group, has given up on stockpiling metal to help support prices.
However, bombed-out prices have presented opportunities for some. China’s strategic stockpile manager bought 8,700 tons of cobalt last year and is aiming to buy another 15,000 tons this year.
The CME, which launched its cobalt contract in 2020, has seen activity mushroom as the price has fallen steadily from its most recent peak.
Some of the surplus has even made it as far as London Metal Exchange warehouses, rekindling a contract that didn’t trade at all last year. Here’s my full take on the cobalt price crash.
ESSENTIAL READING
China is the world’s largest importer of crude oil, arrivals hitting an all-time high of 11.29 million barrels per day (bpd) in 2023. But imports so far this year have been running some 320,000 bpd below last year’s levels, reflecting structural changes as the country rolls out ever more electric vehicles and switches from diesel to liquid natural gas in its trucking fleet. Reuters columnist Clyde Russell asks the big question – have China's crude oil imports peaked?
China’s pivot away from coal is gathering momentum. Reuters senior analyst John Kemp investigates how the country met record electricity consumption in July. Spoiler alert – it wasn’t coal. Meanwhile, China approved just 10 new coal plants in the first half of 2024, an 83% year-on-year drop, as Colleen Howe reports from Beijing.
Wind is king in Germany. Wind farms overtook coal-fired power plants as the main source of German electricity production for the first time in 2023. But the country’s wind generation is now expected to increase by just 1% this year. Reuters energy transition columnist Gavin Maguire explains the problem and looks at what it might mean for Germany’s energy mix and power sector pollution ambitions in the second half of the year.
European Union countries have nearly filled their gas storage as the bloc readies for winter and the potential stoppage of Russian gas deliveries via Ukraine. As Kate Abnett reports from Brussels, gas storage facilities across the 27-country EU are 90% full well ahead of the November deadline
The pain continues for lithium producers. Prices for the battery metal have fallen by 70% over the last year due to oversupply and weaker-than-expected demand from the electric vehicle sector. Chile’s SQM, the world’s second-largest producer, has reported a bigger-than-expected 63.2% slide in its quarterly profit. And CEO Ricardo Ramos isn’t optimistic about the short-term outlook either.
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Editing by Marguerita Choy
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Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.
