In response to trade consultants, the cobalt market is at the moment below strain as a consequence of an oversupply and gradual demand. The warmth is palpable extra on cobalt sulfate costs, that are progressively declining, indicating weaker demand. One cause is China’s passenger electrical car (PEV) sector, which strongly prefers lithium-iron-phosphate (LFP) batteries that don’t depend on cobalt.
Nonetheless, as revealed by S&P International Commodity Insights, the Platts-assessed European cobalt value has held regular at roughly $11.00/lb since October 11however with suppressed buying and selling exercise.
Let’s see what the report reveals additional concerning the present and future cobalt market.
China’s Transfer to LFP Batteries Weakens Cobalt Market
The report revolved across the cobalt market in China. It highlighted that China’s cobalt steel value stabilized after hitting a low in late September. From September 25 to November 21, the value rose by 5.6% and elevated one other 2.0% month to November 21, regardless of some fluctuations.
This restoration was pushed by stronger feedstock prices, as cobalt hydroxide costs remained extra steady in comparison with refined cobalt merchandise.
Nonetheless, in response to Shanghai Metals Market, margins for cobalt sulfate manufacturing utilizing imported cobalt hydroxide turned detrimental in Q3 2023. This strained margin considerably impacted China’s cobalt sulfate output.
- From January to October 2023, mixed manufacturing dropped by 28.1% in comparison with the identical interval final 12 months.
The rationale for the decline stays the same- a slowdown within the PEV sector. The opposite important cause is automakers shifting to lithium-iron-phosphate (LFP) batteries as they’re cost-effective and keep away from utilizing critical minerals like cobalt and nickel. This transition has lowered the demand for cobalt-containing batteries in China.
Moreover, S&P International famous, that in October 2024, cobalt-containing batteries accounted for under 20.6% of car installations in China. This determine is a steep drop from almost 50% in 2021.
Unlocking Cobalt’s Function in Battery Chemistry
Cobalt stays an important element in lots of battery chemistriesproviding stability and security advantages. In 2023, demand for cobalt-containing chemistries grew by 15% year-over-year (y/y) to roughly 500 GWh, accounting for 55% of complete battery demand.
Whereas this represents a decline from 63% in 2022, cobalt chemistries are anticipated to keep up a big market share within the medium to long run as demand continues to develop. Let’s examine how consultants clarify this evolving panorama…
A Shifting Panorama
Cobalt Institute’s latest report revealed that demand for cobalt was primarily pushed by excessive and mid-nickel chemistries driving this development in 2023. Excessive-nickel chemistries noticed a 32% improve, whereas mid-nickel grew by 15%. In the meantime, low-nickel and lithium cobalt oxide (LCO) chemistries skilled declines of 11% and 13% y/y, respectively.
It additional highlighted,
- Demand for cobalt-containing chemistries rose 15% y/y in 2023, to ~ 500
GWh. This equated to round 55% of battery demand in 2023, down from 63% in 2022.
Excessive-nickel chemistries additionally elevated their market share to 11%, whereas low-nickel chemistries fell behind nickel-cobalt aluminum oxide (NCA) chemistries for the primary time.
These cobalt-free chemistries now make up 45% of worldwide cathode demand, pushed largely by lithium iron phosphate (LFP) batteries. For the primary time, LFP overtook nickel cobalt manganese (NCM) cathodes, claiming a forty five% market share in comparison with NCM’s 43%. Whereas manganese-based chemistries additionally contributed, their impression was minor.
Past batteries, cobalt is required in aviation, vitality storage, and electronics and its recyclability makes it sustainable.
Picture: LFP vs. NCM: the share of NCM battery cells declines
Supply: Cobalt Institute report
Pressures Going through Cobalt
Cobalt, regardless of its vital position in batteries, faces important challenges within the provide chain associated to price, composition, and sourcing. Cobalt is expensive, however falling costs have improved battery cell price competitiveness.
The report highlighted that in 2023, NCM and LFP chemistries dominated the worldwide lithium-ion battery market, making up 88% of cathode demand. Automakers in North America and Europe most popular NCM batteries for his or her increased vitality density and longer vary they usually had been primarily utilized in high-performance EVs.
However, LFP batteries have gained market share globally, notably in China, the place their decrease price and lowered reliance on vital minerals like cobalt make them a well-liked alternative. This additionally signifies that though NCM chemistries have excessive vitality density they’re globally much less broadly adopted.
Picture: 2023 Cathode energetic supplies (CAM) product combine from the most important ex. China CAM suppliers, %
Moreover, moral and environmental considerations relating to cobalt sourcing, notably from the DRC and Indonesia are extensively scrutinized over its sustainability and accountable extraction practices.
Cobalt Forecast 2024: Worth and Manufacturing
As cobalt demand continues to face challenges with automakers favoring lithium-iron-phosphate (LFP) batteries, cobalt-containing batteries are significantly dropping market share. CMOC expects cobalt-containing batteries to finally make up lower than 10% of the whole battery combine.
This declining demand is additional mirrored in price forecasts as rolled out by S&P International Commodity Insights famous under:
- Analysts now estimate the cobalt market surplus will widen considerably in 2024, reaching 53,000 metric tons, which is greater than 2X of its earlier predictions.
- The rising surplus has additionally led to a downward revision of cobalt value estimates, with costs now anticipated to fall to $12.72/lb by 2028.
Batteries now drive three-quarters of worldwide cobalt demand, making the market extremely delicate to adjustments in cathode chemistries and applied sciences. As demand for EVs grows, cobalt’s position stays essential, however the rise of alternate options like LFP will reshape the panorama.
The EV sector’s trajectory in key areas, together with the USChina, and the EU, will play a vital position in shaping cobalt’s future. Nonetheless, with battery expertise shifting quickly and financial insurance policies unsure, the trail forward stays unpredictable.
Provide Surge from CMOC, DRC, Australia, and Indonesia
The Democratic Republic of the Congo (DRC), Australia, and Indonesia are the three main international locations that management about 73% of the world’s cobalt reserves. Final 12 months, DRC topped the record, accounting for greater than 70% of worldwide manufacturing.
Supply: Cobalt Institute
S&P International forecasts that cobalt manufacturing is anticipated to soar in 2024. It will likely be considerably pushed by Indonesia’s high-pressure acid leaching (HPAL) initiatives and surge in output from the DRC. Moreover, China’s CMOC, a serious producer, has already surpassed its 2023 full-year cobalt manufacturing steerage by 21% inside the first 9 months.
In H1 2024the corporate secured the place of the world’s largest cobalt producer with a powerful output of 54,024 tons, marking a staggering 178.22% year-over-year (YoY) development. This surge not solely displays the corporate’s pivotal position within the international cobalt provide chain but in addition signifies a contribution to fulfill rising demand for battery-grade cobalt.
Notably, CMOC’s manufacturing surge is primarily linked to its copper-focused technique that resulted in elevated cobalt inventories.
From this report, we will pretty infer that cobalt can nonetheless maintain its floor as a key materials in high-performance batteries, notably in Western markets. Nonetheless, its future will depend upon balancing price, sustainability, and evolving expertise traits.
