Fastmarkets’ cobalt hydroxide payable indicator, min 30% Co, cif China
moved higher to 76.5-77.5% against standard-grade cobalt price (low end) on Friday August 7, up 1% from the midweek assessment of 76-76.5%.
Suppliers aimed for higher payables, citing lingering delays in logistics between the Democratic Republic of Congo (DRC), where the majority of cobalt mines are located, and the port of Durban in South Africa, where the majority of units are loaded and shipped out.
Intermittent border closures and strict quarantine measures, together with a shortage of staff at ports have slowed both inland transportation and shipments.
The quarantine measures enacted to stem the spread of Covid-19 significantly affected the efficiency of customs clearance in the DRC, a supplier source said, adding that it frequently takes him two weeks to get cargoes cleared nowadays compared to one week before the viral outbreak.
It is also not unusual to have shipments delayed for one week due to slow loading and unloading at Durban port, the supplier told Fastmarkets.
With limited notable improvement in spot supply constraints, some consumers attempted to secure as many spot units as possible to keep their operations and finished products deliveries running smooth, especially amid a rapid rally in cobalt salts prices in China.
Fastmarkets’ assessment for cobalt sulfate 20.5% Co basis, exw China
rose to 55,000-59,000 yuan ($7,892-8,466) per tonne on August 7, up 3.6% from 53,000-57,000 yuan per tonne midweek.
Fastmarkets’ assessment for cobalt tetroxide 72.6% Co min, delivered China
jumped to 220,000-230,000 yuan per tonne on August 7, rallying 12.5% from August 5.
That said, the upturn in payables in August was generally slower than in July, with some buyers increasingly cautious on offer hikes due to the quick rebound in benchmark metal prices over the week while offers for September shipments are mostly settled down against September metal prices.
Fastmarkets’ assessment for cobalt standard grade, in-whs Rotterdam
edged up to $14.65-15.20 per lb on August 7, up 6.8% from one week ago.
“Availability is still tight but there’s a clear delineation between those no longer happy to pay these levels and those still screaming for units,” a distributor said.
“Based on the current price trend, it's likely the benchmark metal prices in September would be higher than those in August,” a consumer said. “That means the prices we pay would be quite high.”
“There’s not a lot of appetite to sell on the August quotation period (QP),” a second consumer said.
Appetites for fixed price deals strengthened, supporting prices
With concerns around the unclear near-term benchmark metal price trend, consumers are more willing to secure units in fixed price deals to cut their exposure to the metal prices, sources said.
Fastmarkets’ cobalt hydroxide index, min 30% Co, cif China
was calculated at $11.63 per lb on August 7, up from $10.41 per lb, when the index was calculated at the end of July.
Sales were booked between $11 and $11.50 per lb in the last week of July, while prices continued to make gains into August with more buyers now willing to take seaborne cargoes in the mid-to-high $11 range given the rally in benchmark metal prices in the first week of August.
Fastmarkets increased the frequency of its index publication recently
in response to increased liquidity in the fixed price cobalt hydroxide market.
“A lot of customers are trying for a fixed price rather than a payable - the standard-grade benchmark is increasing and while the Chinese market might be getting a bit ahead of itself, there’s still some concern that metal prices - [against which payables are settled] - will continue to rise,” the first distributor said.
“As long as my customers are able to pay higher prices when higher raw materials prices are factored in, I could buy cobalt hydroxide even at $12 [per lb],” a third consumer said.