CDI: Cobalt sliding into oversupply

The following was released by Cobalt News, which is published by the Cobalt Development Institute. For more information visit www.thecdi.com.

The Cobalt Development Institute (CDI) estimates that total refined cobalt supply in 2010, from the main sources reporting their production, was 76,363 tonnes, which is about 27% greater than in 2009. 

When comparing the current total of our members’ production figures directly with those prepared this time last year, it should be noted that Rubamin has now joined the CDI and prior to 2010 Norilsk had been a CDI member, but now reports as a non-CDI member. Therefore the unadjusted production of CDI members at 30,872 tonnes is some 5,798 tonnes (or 23%) higher than for the same producers in 2009, largely as a result of increased production from Queensland Nickel Pty Ltd (QNPL), Gécamines, OM Group, Sumitomo (Coral Bay) and Umicore. The other CDI members showed only modest shortfalls against the previous year. BHP Billiton sold its Queensland Nickel (Yabulu) assets to the Palmer Group who formed QNPL in 2009, and from 2010 the refined production will be reported accordingly. BHP Billiton’s Kwinana operations produce a cobalt intermediate and will therefore not appear in the CDI refined production figures from 2010.

Total refined production from these non-CDI members in 2010 was 45,499 tonnes which is 10,902 tonnes (or 31.5%) higher than in 2009. It will be noted that Chinese production at 32,930 tonnes is almost 10,000 tonnes (or 42%) greater than that produced in calendar year 2009. This is on the back of a 27% increase year-on-year in 2009 following a 37.7% increase year-on-year in 2008. Chinese refined production arises mainly from imported concentrate, but cobalt is also derived from imported intermediates, white alloy and some local concentrate (about 6%). The figures for China will include stockpiled material but it is rather difficult to know what proportion of the total refined production this would be. 

Production from Katanga Mining has increased in line with the ramp up of its Democratic Republic of the Congo operations, and increases were also recorded by Votorantim, Norilsk and RSA – we understand that the increase in RSA production was from stockpiled concentrate and may therefore be a one-off occurrence. Modest reductions in production were seen elsewhere, though Mopani figures are a best estimate.

Defense Logistics Agency (DLA) deliveries didn’t occur during 2010 but there appears to have been a slight stock adjustment of 8 tonnes. Including the DLA adjusted position, total availability of cobalt from other sources was 45,491 tonnes, or some 31% higher than the same period last year. At Dec. 31, 2010, the uncommitted cobalt inventory in the U.S. DLA stockpile stood at 301 tonnes.

The overall availability of refined cobalt in 2010 totaled a record 76,363 tonnes, some 16,512 tonnes (or 27.6%) higher than in 2009, largely as a result of significantly improved refined production in China and generally improved production, particularly from CDI members. 

Demand

The CDI publishes supply and demand and this data will soon be available in the World Bureau of Metal Statistics/CDI book, World Cobalt Statistics for 2007-2010. This data was derived from worldwide import and export figures. Global apparent consumption appears to be around 61,000 tonnes for 2010, which is about a 9% increase over 2009.

The Americas and Europe appear to have seen a revival in consumption along with Asia (non-China), and once again China has recorded an impressive increase. (The publication can be purchased from either the CDI or the WBMS, and figures for 2010 will be available in May.)

Price

The high-grade (99.8%) cobalt price opened 2010 at US$21.50 per lb. and ended the year at US$18.95 per lb. while the low-grade (99.3%) cobalt price opened at almost US$21 per lb. and finished the year at US17.25 per lb. The 2010 annual average high-grade price was US$20.56 per lb. and for low-grade it was US$18.74. (The CDI takes the average bid/offer spread for both the high grade and low grade Metal Bulletin price quotation when calculating its average price.)