Benchmark Minerals analysts believe that growth in the battery sector will fuel demand for cobalt. The declining use of the metal in the individual cells is overcompensated, it said.
The experts assume that the battery industry will need another 100,000 tons of cobalt by 2025. That represents an increase of 150% over the five-year period, it said. Benchmark further reports that although cobalt prices have recently given positive signs, there are nuances within the market that point to the decisive factors for the future development of the cobalt price – and that is no longer the traditional metal supply chain.
Since analysts commented on cobalt in July, the price of battery metal has risen 15%. (The latest data was released at the end of October.) Benchmark suggests that while this increase looks promising, the medium-term outlook for the cobalt market is rather “mixed”.
The experts also point out that the Chinese State Reserve Bureau is storing cobalt in parallel to the recovery in some industrial markets, which has supported the recent price hike.
In addition, the benchmark report said, purchases of metal from the supply chain for conversion into cobalt chemicals in the summer supported prices and caused stocks to fall.
However, Benchmark did not ignore that, the second COVID wave has now become a reality in many regions of the world. In view of this uncertainty, the aviation industry, which is an important consumer of the metal, is expected to be less active. Therefore, a lower demand is to be expected in this regard.
However, the analysts continued, the positive sentiment regarding battery demand for cobalt chemicals is now the decisive indicator of future price trends in the market. This more than outweighs the poor sentiment regarding demand from traditional cobalt markets.
The recovery of the market for electric vehicles in the second half of the year was strong. China, for example, reported the best quarter in more than 12 months, and electric vehicle sales also increased significantly in Europe.
This, along with better than expected demand for wearable electronics, has significantly improved the outlook for cobalt demand from the battery supply chain compared to early 2020. Now that demand from the battery sector continues to rise, it is normal for this to become the determining factor in cobalt price and sentiment in the sector.
The activities in the metal supply chain will always remain important for the cobalt market, according to Benchmark, but there has been a shift towards the greater importance of cobalt hydroxide and its availability for the battery market.
We think this is excellent news for cobalt societies such as the Canadian one Canada Silver Cobalt Works (TSXV CCW / WKN A2JEX7)who have already identified a first silver and cobalt resource on their Castle project in the heart of the Gowganda Silver and Cobalt Camp!
Canada Silver Cobalt has now launched an ambitious drill program designed to significantly expand the resource base and further results are expected shortly.
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