COBALT FUTURES SNAPSHOT: CME traded volumes exceed 100 lots

Latest analysis from recent activity on the CME’s cobalt metal futures contract, cash-settled against Fastmarkets’ price assessment for cobalt standard grade, in-whs Rotterdam.

Key data 
Jan 20, 2021, 30 tonnes (10 tonnes each for March ($17.95 per lb), April ($18.00 per lb), May ($18.05 per lb)) 
Jan 11, 2021, 15 tonnes (5 tonnes each for February, March and April, all at $17.45 per lb) 
Jan 8, 2021, 30 tonnes (5 tonnes per month for January to June, all at $17.25 per lb) 
Jan 7, 2021, 15 tonnes (5 tonnes each for February, March and April, all at $16.75 per lb) 
Jan 4, 2021, 12 tonnes (4 tonnes each for January, February and March, all at $15.65 per lb) 
Dec 28, 2020, 3 tonnes (1 tonne each for January, February and March, all at $15.60 per lb)

The CME cobalt contract is traded in 1-tonne lots. As of Wednesday January 20, the contract had 95 tonnes of open interest.

Key drivers

  • Growing trade on the CME cobalt contract attributed to strong rally in physical cobalt metal prices since the beginning of the year, prompting buyers to hedge their exposure to rising purchasing costs and potential volatility in the longer run. 
  • Cobalt standard grade, in-whs Rotterdam price stands at $18-18.50 per lb, as of the January 22 assessment, up nearly 17% from $15.30-15.90 per lb at the end of last year.  
  • Strength in the Chinese cobalt market following State Reserve Bureau (SRB) stockpiling moves and tight hydroxide availability, and steady restocking activity from metal consumers elsewhere, are helping to keep cobalt prices underpinned.

Key quotes
“Clearly the EV and greener energy space is currently front and center globally, this cash-settled contract gives the whole supply chain an opportunity to mitigate risk, it also offers professional investors an excellent means to access upside to this exciting growing space” – Adam Mammon, Ocean Solutions LLC

“The reality is that some of the groups looking to hedge are not really in the market at the moment [due to uncertainty in some end-use segments], but the futures market is interesting in terms of attracting the financial players; it makes for a more dynamic market” – a trader

Join Fastmarkets on Wednesday January 27 for a free webinar: How to manage price risk and volatility in the cobalt market.

Our panel of market experts will come together to uncover the anatomy of the cobalt market, whether cobalt price volatility is set to continue, how the market has started to mature and how market participants can protect themselves against its risk.

Click here to register.

Charlotte Radford

charlotte.radford@fastmarkets.com

Susan Zou

susan.zou@metalbulletinasia.com

Published

Charlotte Radford

Susan Zou

January 22, 2021

17:30 GMT

Shanghai, London