The price of cobalt hydroxide has risen by 55% in three months

SMM11, March 14: cobalt prices have fallen from highs since last March, when cobalt prices hit a nearly 10-year high of less than $100000 a tonne.

In an effort to reinvigorate the market, Glencore (Glencore) decided in August to seal up the world's largest cobalt mine, but so far the market reaction has been relatively modest, with cobalt prices hovering around $30000.

Although LME's cobalt metal prices have not moved, the October cobalt price assessment by (Benchmark Mineral Intelligence), a Benchmark minerals consultancy, showed that sulfate prices rose 2.3 per cent month-on-month and, more importantly, hydroxides (usually containing 20-40 per cent cobalt) rose 9.2 per cent.

Prior to Glencore's action, Benchmark cobalt hydroxide was priced at $17050 a tonne. The October estimate was $26400 a tonne, which means prices have risen by more than 50 per cent since then.

Imports of cobalt hydroxide and concentrates rose 28 per cent in the third quarter from a year earlier.

At first glance, the report seems to be good news for cobalt bulls, but battery metals benchmark pricing companies say a better pricing environment is not a "fundamental rise". But the fundamentals largely reflect an improvement in the average price of metals rather than an increase in market demand.

In October, Glencore promised to sell about 1/4 of its annual cobalt production to Chinese battery maker Greenmei (GEM) over the next five years. At least 61200 tons of cobalt hydroxide will be sold to Greenmei (GEM) between 2020 and 2024.

Benchmark noted that the deal, coupled with a supply agreement announced in May 2019 between Glencore and (Umicore), a Belgian company, "could lock in more than 85 per cent of Glencore's cobalt production in the Democratic Republic of the Congo by 2020".

This means that if consumers want traceable hydroxides, but they are neither in Greenmei nor in Umco's supply chain, it may be difficult for them to find large amounts of cobalt hydroxide.

Glencore, one of the few large industrial producers in the Democratic Republic of the Congo, is able to supply traceable cobalt that does not require manual mining.

Due to the dominance of the Democratic Republic of the Congo (which accounts for more than 2/3 of global production and accounts for the majority of the world's reserves), increasing scrutiny of the cobalt supply chain benefits cobalt exploration companies in other parts of the world, while conflict-free cobalt may attract premiums in the future.