The cobalt price has fallen almost 30% this year to $13.90 a pound, according to Fastmarkets data, amid lackluster global demand and rising supply from the world’s new no. 2 producer, Indonesia.
Goldman Sachs is forecasting softness for battery metals including cobalt, lithium and nickel in the second half of 2023 amid an oversupply.
“We expect further downside for cobalt prices in the near term as demand from the EV battery sector wanes while increasing global production keeps inventories healthy,” market analyst Fitch Solutions said in a recent report.
According to the China Association of Automobile Manufacturers (CAAM), 408,000 new energy vehicles (NEVs) were sold in January 2023, almost 50% lower month-on-month and 6.3% lower year-on-year.
The EV sector accounts for 40% of the total cobalt market.
“Elsewhere, demand for cobalt in batteries within consumer electronics including laptops and phones will remain similarly grim in light of the global economic slowdown,” Fitch said.
“We have highlighted the pivoting preference toward reduced-cobalt or cobalt-free battery chemistries in various past analyses, and hold on to our view for this to drive cobalt prices downwards in the longer term as ESG concerns surrounding cobalt mined from the Democratic Republic of the Congo heighten.”
Around one-fifth of cobalt mined in the Democratic Republic of the Congo, the world’s no. 1 producer, comes from small-scale artisanal mines, many of which rely on child labour.
In 2023, Indonesia became the world’s second-largest supplier of cobalt, overtaking Australia and the Philippines.
(With files from Bloomberg)