Cobalt prices are easing back toward $40/lb

By Tom Stundza -- Purchasing, 6/25/2008 10:01:00 AM

Domestic cobalt prices have declined 13% since the peak in March and some analysts believe they will slide further off the $45.50/lb average in June determined by Purchasingdata.com in a survey of buyers. The metal has averaged almost $49/lb in the first half of this year, compared with $30 in 2007 and $17 in 2006.

Platts Metals Week’s assessment for 99.8% cathode imports into the U.S. in the near futures has fallen to $44/lb for Zambian material and $43.50 for Russian and Australian metal. The near-future price from China, the largest foreign supplier, also is being reported as low as $40—a price last posted in December 2007—because of excess supply for world demand, which is highlighted by lagging 2008 demand in industrialized nations, including the U.S.

Cobalt is used to make superalloys, chemical compounds for a variety of applications, cemented carbides and diamond tools, magnetic alloys and specialty steels and metallic alloys. The analysts say buyers are in no rush to buy cobalt while prices appeared to be falling. And traders interviewed by Platts still are seeing consumers coming in for small volumes on a hand-to-mouth basis. MetalBulletin.com, a subscription website, agrees that cobalt prices will drift down this summer in what it calls thin trading as consumers anticipate even lower prices in the weeks ahead.

Looking ahead, some analysts see a pickup in pricing after Labor Day when hybrid car battery manufacture perks up after summertime vacations end. There are anywhere from 5 to 18 pounds of cobalt in every hybrid car battery. Even at 10 pounds cobalt per car, if the market did triple to 1.5 million units that would make 15 million new pounds of cobalt needed annually – a substantial increase in a small 120-million-pound market.

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