Weak downstream demand leads to disconnect in physical, futures cobalt metal market

The local cobalt futures price in China leapt this week, resulting in higher quotations in the spot market, but weak downstream demand and resistance to rapid price hikes created a disconnect between physical and futures prices.

The cobalt price on the Wuxi Stainless Steel Exchange (Wuxi) started to rise quickly at the beginning of this week after consolidating previous gains late in the prior week.
The most-traded September cobalt contract price on the Wuxi rose to 300,500 yuan ($42,065) per tonne at the close on Wednesday August 5, up by 8.5% from 277,000 yuan per tonne on July 31.
The momentum in the futures market was mainly driven by speculative buying after cobalt raw materials prices started to rise on persistent spot supply constraints.

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Susan Zou

August 05, 2020

14:24 GMT