Transport delays from South Africa against an increasingly robust Chinese demand have fuelled a price rally for cobalt hydroxide, used to make chemicals for electric vehicle batteries.
Cobalt prices CBD0 on the London Metal Exchange are at $33,000 a tonne, the highest since early March and up more than 15% since the end of July.
South Africa implemented a covid-19 lockdown on March 27, under which ports handle only essential goods with reduced staff, leaving minerals mined across southern and central Africa without a key route to international markets.
“We are seeing a scramble for cobalt hydroxide in China, (but) buyers are finding it isn’t there,” Benchmark Mineral Intelligence’s (BMI) head of price assessment Caspar Rawles told Reuters.
Cobalt hydroxide prices are typically a percentage of the metal price, known as a payable. According to an assessment by BMI, payables hit levels around 75% in July, their highest in two years, from around 67% last month.
Traders said payables had risen even further, to around 85% currently.
However, surpluses are still expected this year, with CRU Group’s George Heppel putting the number at 6,000 tonnes while BMI forecasts an oversupply of around 5,000 tonnes.
(With files from Reuters)