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Cobalt prices set to fall 8.3% in 2022 as supply chain bottlenecks ease: MI


Price support to remain for remainder of 2021

Market to return to surplus of 1,000 mt in 2022

Stronger supply ramp-up through to 2024 to sustain market surplus

Cobalt metal prices are expected to remain supported for the remainder of 2021 as logistical pressures persist, but are then expected to fall 8.3% in 2022 on supply growth and easing supply chain bottlenecks, according to S&P Global Market Intelligence November Commodity Briefing Service report on lithium and cobalt, which was released late Nov. 23.

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MI Senior Analyst, Metals & Mining Research Alice Yu said in the report that supply growth in the Democratic Republic of Congo and normalizing supply chain bottlenecks forecast for the first half of 2022 were expected to ease the supply tightness experienced in 2021.

Total cobalt supply was forecast to total 196,000 mt in 2022, up from 136,000 mt in 2020 and an estimated 164,000 mt in 2021.

On the demand side, Yu estimated that cobalt demand would continue growing as higher plug-in electric vehicle sales offset the impact of cobalt thrifting in batteries.

MI forecast total cobalt demand to rise to 195,000 mt in 2022, up from 132,000 mt in 2020 and an estimated 170,000 mt in 2021.

Although, with supply also climbing, the overall cobalt market balance was expected to return to a surplus of 1,000 mt in 2022, after moving into an estimated deficit of 8,000 mt in 2021 from a surplus of 4,000 mt in 2020.

"A stronger supply ramp-up through to 2024 will sustain a market surplus during the period, pressuring prices," Yu said in the report.

According to S&P Global Platts assessments, European 99.8% cobalt metal prices have risen 88.7% since the start of 2021 to $30/lb IW Europe Nov. 24, the highest level since December 2018, caused by tightening logistical bottlenecks that hampered trade flows and material availability.

"There are no signs that trade logistics are easing, with inland and port inefficiencies in South Africa exacerbated by a global vessel shortage, shipping delays, and higher fees. [South African state-owned logistics company] Transnet is also proposing to increase the port tariff by 23.96% in the 2022-23 financial year which, if implemented, could sustain high transport costs," Yu said.

She said that overall cobalt demand was benefiting from a broader-based recovery in 2021 in the metallurgical sector and in PEVs, with the aerospace sector seeing increased deliveries — Airbus and Boeing up 51.5% year on year — in the first nine months of 2021, although these were still down 23.8% compared with pre-pandemic levels in the same period of 2019.