Cobalt continues year-end slump; double-digit discounts emerge for 2019

Cobalt prices continued to slide in the second half of the month as sellers feeling the pressure to destock ahead of the year-end faced buyers reluctant to add to their books in December.

Fastmarkets assessed high-grade cobalt prices at $26.25-28 per lb, in-warehouse, on Friday December 21, down from $27-29 per lb at the time of the midweek assessment.
  
Fastmarkets assessed low-grade cobalt at $26.50-28 per lb compared with $27.50-29.50 per lb midweek.

Despite stability over much of October and November - when material was less freely available - market participants had expected prices to fall before the year-end after eyeing big moves in metal and sulfate prices in China.

But the pace of declines has taken some by surprise. It has been attributed to a bearish outlook for 2019 and the belief that producers will have units to sell.

“I think producers would be aggressive today, but there’s [no spot inquiry] to be aggressive on… If there were any 10- or 20-tonnes inquiries, I think you’d see a lot of competition,” a distributor source said.

Said a trader: “I’m surprised at the pace [of the falling market]. The market is having an incredibly hard time. People are in pain and either way you want to get out of the pain by booking a profit or taking the loss."

Market participants had also arrived at a more bearish outlook for the start of 2019 following an aggressive mating season that has seen discounts (against the low point of the low-grade price assessment) in long-term contracts agreed around 10% as sellers fight to lock in tonnage. Discounts have been discussed and rumored higher but not confirmed by Fastmarkets.

“Reality is hitting. Double-digit discounts are being agreed, and as soon as you hear that, you know there’s material about,” a second trader said.

Said another trader source: “I expect we’ll see $25 in January. It is not the time to be offloading."

From January, Fastmarkets will rename its low-grade and high-grade cobalt price assessments as standard-grade and alloy-grade respectively.

Charlotte Radford

charlotte.radford@fastmarkets.com

Published

Charlotte Radford

December 24, 2018

17:02 GMT

London