LME WEEK 2019: Cobalt prices to move at 270-300 yuan/kg in 2020

LONDON, Oct 29 (SMM) – Cobalt prices are likely to stabilise between 270-300 yuan/mt in the next 12 months, as the global supply surplus is narrowing, said SMM's New Energy Analyst Hong Lu.

In a speech on China’s new electric vehicle policy at SMM London Metals Seminar during the LME Week, Hong said factors including pre-holiday stockpiling by downstream consumers in January, the imminent regulations on battery electric vehicles and sales performance of 5G cellphones will drive cobalt prices in the year ahead.

Inventories of cobalt raw materials in China have reversed to trend downwards after smelters gave up signing long-term purchase agreements with suppliers overseas.

Inventories of lithium ore globally, meanwhile, are continuing their increase, with supply pressure spreading to mines, Hong added.

The commissioning of new mining projects in Australia boosted supply, as lithium prices soared in 2017, before when the global lithium ore market was in a tight balance.

Hong expects prices of lithium salts to hover between 50-60 yuan/kg in the year ahead.

Global demand for lithium salts is estimated to grow 14.5% in 2019 to 285,000 mt of lithium carbonate equivalent (LCE), while demand for lithium sees a compound annual rate of growth of 17% for 2019-2021.

Cobalt and lithium are key components for batteries powering vehicles. SMM expects BEV production to expand 8% in 2019 to 1.35 million units.

There are over 7 million BEVs on the roads globally as of 2019, with 90% in China, the US and EU.

China, the world's largest EV market, is set to wind down a subsidy program for EVs and plug-in hybrids by the end of 2020, while the dual-credit scheme on automakers will continue to facilitate the development of the EV industry.