Short term grim for cobalt

The short-to-medium-term outlook for cobalt remains unfavourable, according to a report from London-based Roskill Information Services.

In 2001, prices for the base metal fell almost continually, to less than US$8 per lb. in mid-October from US$14 in the early part of the year. Demand is expected to remain weak for the next two years, and no significant production cutbacks are planned, so supply is unlikely to ease.

The report, titled The Economics of Cobalt (ninth edition), predicts that prices will range between US$5 and US$10 per lb. over the next three years. However, if they sink below US$5, which seems to be the market floor, cutbacks would almost certainly follow.

Demand for cobalt in 2000 was 34,000-35,000 tonnes, which is 40% higher than in 1995. The average annual growth rate has been 7%. Before the events of Sept. 11, the prospects for cobalt demand in the short term were already clouded by the possibility of an economic recession and by weakness in the high-tech sector. In the medium-to-long term, however, consumption is expected to return to levels seen in the second half of the 1990s.

Superalloys remain the major market for cobalt, accounting for almost a quarter of consumption (8,000 tonnes in 2000). However, this consumption is largely determined by trends in the aerospace industry, and although forecasts made before the terrorist bombings predicted growth rates of up to 5% per year to the end of the decade, this now seems unlikely.

The fastest-growing sector for cobalt demand is batteries. Demand for cobalt in small rechargeable batteries used in personal computers and cell phones is forecast to almost double to 7,100 tonnes in 2010 from 3,600 tonnes in 1999.