Kenworth and Peterbilt first electric Class 8 trucks up Pike’s Peak; fuel cell and BEV
Sales of chargeable vehicles more than triple in EU in Q3 to take 9.9% new market share

Roskill: Cobalt demand to grow steadily over the next decade

Despite the COVID headwinds from the aviation sector and the trend towards thrifting cobalt out of automotive applications, Roskill’s newly-released cobalt report forecasts a steady demand growth for the metal to 2030.

Largely benefitting from its stability, hardness, anti-corrosion and high-temperature resistance characteristics, cobalt metal and its compounds are widely used in many industries important to the modern society, such as various battery applications, aerospace, and energy.

Since the commercialization of Li-ion batteries in early 1990s, it has been consumer electronics that has underpinned cobalt demand. The past decade saw a rapid growth of cobalt use from the automotive sector as a result of adoptions of cobalt containing cathode materials, although portable electronics remains by far the largest single end-application of cobalt.

Underpinned by the huge demand for cobalt feedstocks from the battery sector versus relatively tight supply, the cobalt metal price climbed from below US$15/lb in 2016 to a ten-year high of US$43/lb in Q2 2018. High metal prices and hydroxide payables in turn led to an enormous supply response from producers in the DRC, including artisanal producers. New supply from sizable producers like Katanga Mining, coupled with swing artisanal production, put the market into oversupply.

Consequently, prices started to retreat from mid-2018 and fell to a three-year low of $13/lb in July 2019.

The solid growth in cobalt market was, however, disrupted by the COVID-19 pandemic which has impacted the global economy and other commodity markets in an unprecedented way. Aviation has been one of the sectors hardest hit by the pandemic. The battery industry has been less affected, owing to rising EV sales in Europe in H1 and expected recovery in 3C and EV sales in China in H2. Overall, cobalt demand in 2020 is forecast to be broadly in line with 2019, slowing down from the historical average growth rate.

Meanwhile, said Roskill, the supply side has been so far more severely impacted by the pandemic. In Africa, a number of mining operations temporarily suspended production during the first half of the year, with some remaining closed as of October 2020, including Ambatovy in Madagascar and most of the artisanal and small-scale (ASM) operations in the DRC.

Refining activities in China have also been affected to some extent by strict quarantine measures imposed across the country in the first four months of the year, with refineries running at low utilization rate.

Production cutbacks coupled with Mutanda’s absence have triggered a tightening in cobalt feedstocks so far in 2020, and such tightness has been further intensified by logistic disruptions in Africa, caused by the pandemic, including weeks long closure of Durban port, a key transition point for shipping cobalt raw materials from the DRC. This has in turn pushed the prices for all forms of cobalt products higher, bringing the cobalt market to a more balanced state after a three-year oversupply.

Roskill forecasts Cobalt demand roughly to double by 2030, with battery applications accounting for majority of the overall demand. Despite the growing trend towards reduced use of cobalt per unit in the automotive sector driven by cost and ESG concerns, on a contained basis, cobalt demand would still be boosted by the growing penetration of EVs and exponential growth in EV sales in the coming decade.

In addition, with 5G supporting infrastructures rapidly being built up in China and elsewhere, Roskill believes the successful commercialization and roll-out of 5G technology can create new growth potential for the portable electronics industry from 2021 onwards, which can in turn boost smartphone sales and cobalt demand in the medium term.


The comments to this entry are closed.