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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (30417)	12/16/2008 11:02:38 AM
From: LoneClone	Read Replies (1) \| Respond to of 193918

Cobalt bounces despite cheap Russian sales New York (Platts)--12Dec2008 platts.com Cobalt prices bounced sharply this week, with most of the activity led by sales of high-grade Xstrata/Falconbridge cathode on BHP Billiton's web site, while some persistent sales of Russian cobalt as low as $8.50/lb and $9.00/lb continued to be reported. BHP sold a total of 85 mt of cobalt on its web site between December 4 and December 11, although one sale at $16.00/lb on December 11 was taken off the site and on Friday morning a new sale, also dated December 11, at $17.20 emerged. Sales by BHP have been spread between Europe (45 mt) and North America (40 mt) and traders said a large part of the North American business over the last week was linked to a prompt requirement by a consumer that needed that grade of cobalt to atomize into powder. Before the latest run of BHP sales, its previous piece of business had been on September 12 for 5 mt at $36.50/lb delivered, duty-paid, Europe. Last week some traders predicted that if BHP dropped its price to between $12 and $13 it would trigger a round of buying. But while BHP was still offering at around $15/lb, it accepted a lower bid of $13.20 and the current round of buying started. But one trader dismissed the BHP activity as traders trying to push it up. "For sure merchants are trying to book BHP and get it higher. But I don't see the point of it, given that consumption sucks," he said, expressing surprise that BHP had sold as much as 85 mt in the space of a week. "It got to a level where it drew buyers out," said another trader. "The $12-13 level was significant," he added. He said that it looked like consumers had been consuming more cobalt than people realized but also conceded that demand globally had probably fallen by around 30% in the last two months. He said that it had also become very hard to obtain offers of Falconbridge/Xstrata cobalt on the open market and normally under such circumstances, that was when traders turned to BHP. He said that if he was offered Falconbridge/Xstrata cathode at $16 he would be a buyer. A third trader said that "BHP is being abused .... BHP keeps getting hit and nobody wants to offer." But he also said that BHP was at the top of the market and said he would sell that grade of cobalt for under $16. Other traders suggested the BHP activity was related to short-covering before plants close for the holidays. "I think what's happened is that a number of producers and traders went short at around $25 [on the way down]" and these shorts were being covered to some degree," said the second trader. Meanwhile, a consumer said he was uncertain whether the bounce in price was temporary or short-term. "I don't know if it's real or not, or whether it's the dead cat bounce," he said., adding that he would never buy from BHP because of the cash upfront payment terms. He said that the $16 was the premium required for BHP material under those payment terms, otherwise, he said that it would be hard to justify paying more than $15.75/lb. A second consumer concurred, saying, "I don't know it's necessary to pay $16 for it right now. But BHP numbers are very influential." The Platts assessment for high-grade 99.8% cathode rose to $13.50-15.75/lb delivered US Thursday from $12.50-14.50 a week earlier, with the lower end of the spread reflecting dealer and consumer views of where Jinchuan cobalt was available. In Europe, the Platts assessment for 99.8% high-grade cobalt rose to $14.00-16.00/lb delivered Thursday from $12.00-14.00/lb a week earlier. In the low-grade markets, several traders and consumers said that there was one major trader that was selling Russian K1Ay at $9/lb or less to select consumers and not making it widely available to the market in an attempt to keep the monthly average published price down because of formula-based contracts. The second consumer said that he had been unable to obtain offers that low. "If you go on the open market, you can't buy K1Ay at under $12, unless you're calling in a favor and then you might get it at $11.75," he said. A third consumer agreed he could not buy K1Ay at under $11.75. Meanwhile, several traders said it was not possible to obtain offers at under $12.00/lb. A third trader said that he had offered K1Ay at above $11 on an internet tender for 30 mt for fourth-quarter 2009 delivery and said that the business concluded at $9/lb, which he said equated back to $8.50/lb if it had for delivery in the next 30 days. A fourth trader refused to participate in the tender, claiming it lacked transparency. "You only get to hear the winning price and you don't hear who the buyer is unless you are the winning offer," the trader said. Meanwhile, the first trader insisted there had been several sales of K1Ay at $8.50-9.00/lb without claiming to have participated in them. On that basis, he put the Russian cobalt market at $8.50-9.50/lb. The Platts assessment for Russian 99.3% cobalt ingot rose to $12.00-14.00/lb Thursday from $10.00-11.00/lb a week earlier. --Anthony Poole, anthony_poole@platts.com