Cobalt prices weaken again faced with limited buying

The price of cobalt continued to fall last week, while prices for standard and alloy-grade units converged, in a market where sellers lowered their offers to offload material not declared on long-term agreements.

Fastmarkets assessed the price of standard-grade cobalt at $13.85-14.50 per lb, in-warehouse, falling from $14.25-15 per lb on June 19, and down 3% week on week.

Fastmakrets’ assessment of the price for alloy-grade cobalt fell to $14.50-15.15 per lb, in-warehouse, on June 21, down from $14.60-15.30 per lb midweek, and down 4% over the course of the week.

Sellers cut offers across both grades to lock in spot sales - most of which are for around five-tonne apiece - in anticipation of limited opportunities to offload for the next couple of months.

“One or two buyers are coming back to see if they can pick up material pre-holiday,” a trading source said.

Alloy-grade prices fell more heavily in the first half of the week but were relatively stable in the second half, while traders considered limited opportunities to cover units back at cheaper prices.

“We can’t really cover [alloy-grade] back,” a second trader said.

Formulas on this year’s long-term contracts, which are agreed at discounts against the low of the standard-grade quote, are discouraging buyers from visibly picking up units in the spot market.

“Customers are very calm and they only want to buy hand to mouth; they have long-term contracts with good discounts so they can declare additional volumes on those,” a distributor said.

Prices were last at these levels in mid-March - a time when larger buyers and investors started to consider whether to restock with material, such was the appeal of lower prices. Similar inquiries have yet to appear this time around, which some are taking as a bearish sign for the next few weeks.

“Last time we were at these levels we started to get a lot of inquiries come through, but there’s been nothing since the last [Fastmarkets] quote,” a third trader said on Friday.

Others have maintained the view that demand is steady enough, considering the start of the typically slow summer season to limit the downside.

“It is competitive and there is a bit of uncertainty among buyers as to whether they should hold back or not. There’s a decent balance at these prices and if [demand] stays this way for the summer I don’t think we’ll see $12 any time soon,” a final trader said.

“I’m still bullish overall; it has to rebound, but there’s nothing to trigger that at the moment,” a producer said.

Charlotte Radford

charlotte.radford@fastmarkets.com

Published

Charlotte Radford

June 24, 2019

12:45 GMT

London