Sign of things to come..................
Cobalt Triples in Price
Trader buys up stocks
A London trading company has become a dominant force in the market for cobalt, causing the price of the metal, an essential element in super alloys and speciality chemicals, to treble so far this year to $18 a pound. MRG Cobalt Sales, a specialist metals trader, is thought to have been aggressively buying stocks of cobalt since the middle of last year when prices were falling.
It has signed marketing arrangements with Gecamines, the Democratic Republic of Congo's state-owned mining group, and ZCCM of Zambia, two of the world's biggest suppliers.
Industry insiders say MRG now controls about one third of the world's cobalt supply.
"MRG controls a lot of the deliverable metal, but they are not selling," one trader said yesterday.
MRG, a 10-year-old trader and distributor of specialist metals company controlled by the Weisfich brothers, was unavailable for comment.
"Consumers and some traders thought they could keep prices low last year by running down stocks and buying as and when they needed it," a trader said. "Now they can't find any metal and they're getting desperate, pushing prices higher."
Cobalt is an element in super alloys used for making engine turbines. It is also used in making batteries, tyres and blue colourings for glass. It is traded openly between buyers and sellers, not on any exchange.
Apart from Zambia and Congo, Russia is a big supplier of cobalt but is having difficulty delivering because of cuts and closures at its plants. Smaller producers in Australia, expected to come on stream this year, have also been delayed.
Traders said big Canadian mining groups, such as Falconbridge, Inco and Sherritt International, which together provide about 30 per cent of the world's cobalt, had barely enough metal to cover commitments entered into last year and were unable to buy more on the open market.
David Elliott, cobalt marketing manager at Falconbridge, said yesterday the company had sufficient stocks to supply its existing customers. But he conceded that the market was tight and said there was no excess material available.
Another important source of cobalt is the US Defence Logistics Agency, which stockpiled strategic metals during the cold war but is now disposing of its supplies through monthly sales. Last month's sale, at which MRG acquired all the metal offered, was so heavily oversubscribed that the DLA is to hold an extra one in March. The next sale is on February 23.
"As consumers get more desperate, and DLA sales are overbid, prices are likely to rise even further," said Nick French at Quest Metals in London.
The Financial Times, Feb. 12, 1999 |
