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As the bottleneck of the supply chain eases, cobalt prices will fall by 8.3% in 2022: MI

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Price support will continue until the rest of 2021

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By 2024, supply will increase to maintain market surplus

According to Standard & Poor’s Global Market Intelligence’s November Commodity Briefing Service’s report on lithium, cobalt metal prices are expected to continue to be supported for the rest of 2021 due to continued logistics pressure. However, due to supply growth and supply chain bottlenecks eased, cobalt is expected in 2022. Metal prices will fall by 8.3% and cobalt, which will be released in late November 23rd.

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Alice Yu, senior analyst at MI Metals and Mining Research, stated in the report that the supply growth in the Democratic Republic of the Congo and the normalization of supply chain bottlenecks predicted in the first half of 2022 are expected to ease supply tensions in 2021.

The total cobalt supply is expected to be 196,000 metric tons in 2022, which is higher than the 136,000 metric tons in 2020 and the estimated 164,000 metric tons in 2021.

On the demand side, Yu estimates that cobalt demand will continue to grow, as higher plug-in electric vehicle sales offset the impact of cobalt savings in batteries.

MI predicts that the total demand for cobalt in 2022 will rise from 132,000 metric tons in 2020 and an estimated 170,000 metric tons in 2021 to 195,000 metric tons.

Nevertheless, as the supply is also rising, the overall balance of the cobalt market is expected to return to a surplus of 1,000 metric tons in 2022. Previously, a shortage of 8,000 metric tons was expected in 2021, from a surplus of 4,000 metric tons in 2020.

"A stronger increase in supply through 2024 will maintain market surplus during this period, putting pressure on prices," Yu said in the report.

According to the assessment of S&P Global Platts, since the beginning of 2021, the price of 99.8% of cobalt in Europe has risen by 88.7% to 30 USD/lb IW Europe on November 24, which is since 2018 The highest level since December 2008, due to tighter logistics bottlenecks hindering trade flows and material availability.

"There is no sign that trade logistics is slowing down. The global shortage of ships, transportation delays and rising costs have exacerbated the inefficiency of South Africa's inland and ports. [South African state-owned logistics company] Transnet also proposed to increase port tariffs in the 2022-23 fiscal year. 23.96%, if implemented, it may maintain high transportation costs," Yu said.

She said that the overall demand for cobalt benefited from the broader recovery of the metallurgical industry and PEV in 2021, and increased deliveries in the aerospace industry-Airbus and Boeing increased 51.5% year-on-year in the first nine months of 2021, despite the same period in 2019. Compared with the pre-pandemic level, it still fell by 23.8%.

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