Cobalt demand is expected to exceed 100kt this year, and CRU forecasts total demand of cobalt materials to increase at a CAGR of 11.6% over the next ten years. Alongside this large increase in demand, CRU also expects changes to the way refined cobalt is traded and produced. This is primarily due to a shift in cobalt demand from metallic products to chemical products.
The Cobalt Market Has Two Main Categories
How Is This Likely To Change In The Future?
Due to this strong increase in cobalt demand for chemical applications, CRU estimates that in 2017 there will be a world deficit of 4,000 tonnes for refined cobalt chemicals and over 1,000 tonnes for cobalt metal. CRU expects that the cobalt metal deficit will narrow in the mid-term (2017-2021), while the refined cobalt chemical deficit will remain at high levels.
The relative availability of cobalt metal compared with cobalt chemicals over the next five years could result in a price arbitrage opening between the two products, as current acid dissolution capacity struggles to meet chemical demand.
How Will The Market Adjust To This Change?
Which Cobalt Chemicals Are Best Suited For Commoditisation?
However, the electric vehicle and energy storage system markets are expected to be the principle drivers of cobalt demand growth over the next ten years. These industries require much larger battery sizes and as a result, manufacturers are keen to limit cobalt dependency in order to reduce costs and limit the risk of running into issues acquiring raw materials.
Consequently, NCA (Nickel Cobalt Aluminium) is fast becoming the industry standard for EVs and ESS as opposed to LCO for conventional electronics. NCA chemistries typically have a far lower cobalt content by weight and require cobalt sulphate as a raw material – as opposed to cobalt oxide for LCO. As a result, CRU expects cobalt sulphate to be the most widely traded cobalt chemical in the long-term, with total demand reaching just under 60,000 tonnes by 2026.
[investment_title align=”left” tag=”h4″ title=”About The Author”]George joined CRU in 2017 as a Consultant within the Nickel, Stainless Steel and Special Alloys team. He is responsible for reporting on the Cobalt and Molybdenum markets, including annual market outlooks, quarterly updates and monthly monitors.
George worked in pricing analysis and forecasting in the energy industry, focusing on sulphur and its end-use markets. After that, he moved into the minor metals trading sector with a primary focus on nickel-cobalt superalloys, as well as alloy addition elements (Re, Ta, Hf, W, Mo) and rare earth elements. George has experience working with minor metals in the USA and the UK, and his scientific background has been a particular benefit in analysing minor metal end-use markets. George has Masters in materials science from Oxford University.[/investment_title]