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Cobalt’s upside is limited without China on board: While market participants at last week’s MMTA conference in Edinburgh were enjoying cobalt having found its floor and the resultant round of restocking, delegates in Shanghai were more concerned about whether Chinese buying and demand outlook would be enough to support higher prices.
Cobalt metal and sulfate prices have tracked higher in China over the past few weeks as rising international prices have strengthened local sentiment, but Chinese consumers’ reluctance to start buying on a larger scale is expected to cap gains. Delegates added that while buyers have started to look to lock in hydroxide volumes, the recent increase in prices – standard-grade cobalt is up 15.4% since the end of last month – remains fragile into the typically weaker summer season…
…because oversupply continues to weigh on the market Various bullish supply-side announcements, (the suspension of sales and exports of hydroxide from Katanga in the Democratic Republic of Congo (DRC), halt to production at Chambishi and closure of Boss Mining), came before aggressive buying and lower producer stocks finally forced cobalt prices to bottom out late last month.
“A year ago, [the Chambishi news] would have sent the market to $50 [per lb],” one trader said on the sidelines of the conference.
But one difference compared with 12 months ago is the availability of metal in producer hands. They are, for the time being, believed to be sitting on more comfortable stocks but could start to build up inventories again, pending another round of buying.
And delegates could not rule out the threat of Chinese metal production and artisanal output from the DRC should prices continue to climb, with nothing to suggest that demand has improved so as to absorb such an increase.
Nickel supply to continue to rely on laterite ore Laterite ore will continue to be the leading contributor to nickel supply because the other kind of ore – sulfide ore – is facing continuous depletion.
“The ore supply that come from traditional regions, such as Canada and Australia, is mainly sulfide ores and reserves of sulfide ores have been depleting,” Macquarie Capital senior commodities consultant Jim Lennon said at the conference.
There are two kinds of nickel ore: laterite ore accounts for 70% of total volume; and sulfide ore makes up the remaining 30%.
Among the nations with an abundance of laterite ore reserves, Indonesia and the Philippines have provided and will continue to provide the most nickel supply globally, according to Lennon.
Integration in nickel battery industry will intensify Nickel miners and battery makers joining hands in upcoming battery projects is likely to become a trend driven by higher margins.
Integration and collaboration between the two will guarantee sufficient and stable supply and better risks management, according to panelists at a nickel session during the conference on April 11.
“There’ll be less of the market that is just freely available and tradable and more will go into integrated or captive projects,” Alex Khodov, principal nickel analyst at Norilsk Nickel, said.
Production of lithium from brine is increasing Due to their cheaper production costs, lithium materials produced from brine have a price advantage over those produced from spodumene. Lithium prices have remained under pressure due to increasing supply from new battery-grade carbonate and hydroxide projects in China using brine as a raw material. Supply is expected to exceed demand in the short term, and the price of materials produced from spodumene will face pressure in the near future.
More lithium hydroxide demand expected China’s 2019 new energy vehicle (NEV) subsidies only support vehicles with higher driving range and high energy density batteries, meaning most batteries producers have consolidated efforts to shift production to higher nickel-content NMC (nickel, manganese, cobalt) cathodes in batteries. Demand for lithium hydroxide is expected to increase as one of the most important raw materials for producing such chemistries.
“Demand for lithium hydroxide will exceed lithium carbonate supported by the development of high-nickel contend batteries, and more focus will be on hydroxide in the future,” a lithium producer said.
Demand for natural graphite is likely to continue to outstrip supply Graphite anode material is still the mainstream product in the battery materials market, but the use of natural graphite is gradually rising. The natural graphite supply is expected to be short by 34,000 tonnes globally in 2020. It is expected that by 2025, the market for battery cathode materials will require an additional 1.2 million tonnes of natural graphite, which may lead to a shortage of 385,000 tonnes, Jonghui Wang told delegates at the conference.
Flake graphite is gaining more attention Market participants are keeping a close eye on flake graphite prices and due to increasing demand for graphite cathode from the NEV sector and its cheaper price compared with synthetic graphite.