By Pratima Desai
LONDON (Reuters) – Shrinking demand from battery makers for both consumer electronics and electric vehicles and mounting supplies has altered the landscape for cobalt which is now expected to see many years of surpluses.
Expectations of surpluses are why prices of cobalt, which ensures batteries do not easily overheat or catch fire, around $20 a lb have halved since May when they touched $40 a lb, the highest since mid-2018.
Graphic: Cobalt price https://fingfx.thomsonreuters.com/gfx/ce/jnpwyyexnpw/aaa%20cobalt%20price.PNG
Demand for electronics, such as mobile phones, which use lithium-ion rechargeable batteries with a cathode that typically contains 60% cobalt, has been sliding due to consumer belt-tightening as global growth slowed.
According to International Data Corporation, worldwide smartphone shipments declined 9.7% to 301.9 million units in the third quarter of 2022 from the same period last year.
“Cobalt has been dragged down by weaker-than-expected demand in the second half of 2022, and faster growth in mine supply from the Democratic Republic of Congo (DRC) and Indonesia,” said Macquarie analyst Jim Lennon.
Graphic: Electric vehicle sales — Rho Motion https://fingfx.thomsonreuters.com/gfx/ce/movakknqova/Electric%20vehicle%20sales.PNG
Electric vehicle sales remain strong. But the share of lithium iron phosphate batteries (LFP) has been growing at the expense of batteries that use nickel, cobalt and manganese cathodes (NCM).
LFP batteries in electric vehicles are expected to amount to 42% of the total at more than 26 million units by 2027 compared with 20% of 3.2 million units in 2020.
Graphic: Cobalt market balance – Benchmark Mineral Intelligence https://fingfx.thomsonreuters.com/gfx/ce/znvnbbekgvl/aaaa%20Cobalt%20market%20balance.PNG
“There’s been a bigger move towards LFP, particularly within China, which has had an impact on cobalt demand,” said Benchmark Mineral Intelligence (BMI) analyst Caspar Rawles.
BMI expects a 5,000 tonne cobalt surplus this year and demand at nearly 164,000 tonnes. The consultancy forecasts surpluses around 16,000 tonnes in 2023 and 2024.
Graphic: China cobalt imports – Trade Data Monitor https://fingfx.thomsonreuters.com/gfx/ce/mopakknlopa/aaa%20china%20cobalt%20imports.PNG
In DRC, the world’s largest cobalt producer, logistical problems due to COVID restrictions last year and in 2020, meant tight supplies.
Numbers from Trade Data Monitor show DRC exports of cobalt products to China above 280,000 tonnes in Jan-Oct this year, 17% and 23% higher than in the same period last year and 2020 respectively.
Macquarie’s Lennon estimates global mine supplies of cobalt rose 12% this year to 181,000 tonnes and expects cobalt market surpluses until 2027, starting with excess supplies of 4,200 tonnes this year.
(Reporting by Pratima Desai; editing by Louise Heavens)
