Cobalt market seen set for excess supply
LONDON, Aug 3 (Reuters) - Increased cobalt output from Australia's Pressure Acid Leach (PAL) projects and new production in North America and Asia will result in the market being oversupplied in the next few years, Metal Bulletin Research (MBR) said.
"MBR believes that whilst over the next decade prices will breach the $10.00/lb level, we do not believe that this will be for a sustained period," MBR said in a special report on Thursday.
Around a third of global cobalt supply comes from Africa, and although output there will recover from current reduced levels, it will be some time before it reaches the peaks seen in the late 1980s.
However, the production focus has now switched to Australia's PAL projects and, despite commissioning problems, this region is likely to achieve increasing prominence in the supply chain.
"MBR believes that Australian output should account for over 15 percent of (total) output by 2010, against the current level of eight percent," the report said.
On the demand side, battery sector consumption was forecast more than doubling from current levels as use of batteries in mobile applications and electric vehicles expanded.
Superalloy consumption, the largest end-use, would increase by 50 percent as aircraft fleets were modernised and upgraded. New aircraft such as Airbus Industrie's [ARBU.UL] giant A3XX were seen boosting superalloy demand for their increasingly larger and more efficient engines, MBR said.
But the price outlook largely hinged on supply, and there were a myriad of cobalt projects under consideration.
"If nickel and copper rally strongly over the next few years, there is the potential for sustained over-supply in the cobalt market, driving prices lower," the report said.
Cobalt, typically a by-product of copper and nickel, is currently around $14.00/15.00/lb, basis 99.80 percent metal. |
