What followed on those occasions was significant downward price trends, with the price of standard-grade cobalt closing the year down by 68% and 39% respectively from the previous years’ highs. While market fundamentals are different this time, the current direction of price movements almost mirrors those earlier years. Only three times in its recorded price history has cobalt metal broken above $40 per lb. In the second half of the year, fundamentals across the cobalt value chain flipped weak demand following Covid-related lockdowns in China while bearish global macroeconomics pushed prices down steeply. All Rights Reserved.Supply tightness, geopolitics and logistics constraints pushed prices to record highs in the first half of 2022. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2019 and/or its affiliates. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. Factset: FactSet Research Systems Inc.2019. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. Meanwhile, shares in the Chinese firm Zhejiang Huayong Cobalt have roughly tripled in 2017. In Canada, a small firm called Cobalt 27 Capital promotes itself as offering investors "pure-play exposure to cobalt." Shares have increased seven-fold this year, though the stock is volatile. Investors may not want to trade cobalt and tungsten, but there are other ways to profit from their rise. The country is the largest producer of so-called rare earth minerals, which are used to make products including flat-screen televisions, smartphones, car batteries and wind turbines.īeijing was forced to alter its rare earth export practices in 2015 after former President Barack Obama filed a formal complaint about export restrictions in 2012 with the World Trade Organization. Like cobalt, tungsten is predominantly produced in a single nation: China.īeijing has cracked down on miners in recent months to ensure they are following environmental regulations, knocking out a significant amount of tungsten production.ĭavid Merriman, a senior analyst at Roskill, said that authorities may have another motive: Reduced production could boost prices and help large producers in the country.Ĭhina has in the past been accused of restricting the export of tungsten and other minerals that are crucial for the manufacture of high-tech devices. Its price has spiked 27% since January because of supply constraints, according to data from Metal Bulletin and the metals research firm, Roskill. Tungsten - a "minor metal" that's also called wolfram - is an extremely dense material that makes steel harder and more durable. But there's little current demand for new copper and nickel mines, according to Gerbens. Related: Big Oil wants to tax itself and give cash to AmericansĬobalt is a byproduct of copper and nickel production, and is not mined on its own. The Democratic Republic of Congo, which has vast natural resources but a reputation for instability, mines about 60% of the world's cobalt. There are also concerns about supply constraint. Cobalt is a crucial element in electric car batteries. Gerbens said there are "questions about whether there will be enough critical raw materials" to meet the auto industry's needs. Volkswagen ( VLKAY), for example, said Monday that it would spend more than €50 billion ($60 billion) on battery cells as it pushes to electrify all 300 of its models. But demand is expected to surge as automakers shift more production to electric vehicles. India, France, Britain and Norway also want to ditch gas and diesel cars.Ībout 10% of current cobalt production goes towards electric car batteries, according to Andries Gerbens, a cobalt specialist at Darton Commodities. Sales of electric vehicles are expected to grow exponentially in the coming decades, with oil cartel OPEC recently forecasting that there will be over 140 million fully electric cars on the roads by 2040.īut that estimate could prove conservative.Ĭhina, the world's largest car market, is working on a plan to ban the production of vehicles powered only by fossil fuels. The performance has been fueled by one main factor: the rise of electric cars. UBS says it's the top performing base metal this year. Cobalt prices have nearly doubled since the start of the year to trade around $29 per pound, according to data from Metal Bulletin.
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