COMMENT: The battery boom and emerging spot cobalt hydroxide market

Cobalt consumers are increasing their exposure to the emerging hydroxide spot market in 2019 in response to rising supply volumes of intermediates and differing fundamentals at other points along the supply chain.

Traditionally, buyers have signed annual or multi-year contracts with suppliers to secure the supply of cobalt hydroxide. In most cases, payment was negotiated and agreed by both parties at a certain percentage payable against the low-end of the standard-grade cobalt metal price, as assessed and published by Fastmarkets. This was especially the case during the mating seasons in 2016 and 2017, when buyers were eager to lock in supplies of feed in a tightening market, while optimism about the positive consequences from the adoption of electric vehicles (EVs) gathered pace. Payables for supplies of cobalt hydroxide in 2018 were agreed at 80% of the metal price or higher. But a lot has changed in the past 18 months. Expectations created by the EV boom and the resulting price momentum - with benchmark cobalt prices increasing by more than 200% between January 2017 and April 2018 - gave rise to...

Published

Charlotte Radford

Susan Zou

January 29, 2019

20:18 GMT

Shanghai, London