Katanga Mining Ltd Ord KATFF

RE:RE:RE:Cobalt Market Update

[bobsacramento]

Well it was the speculation of added  demand out of China (EV related, battery factories, etc)   + baseline (infrastructure + planes, etc) non EV demand that spiked prices last year. People always forget that demand has also reduced significantly because baseline demand especially out of China has started to slow down significantly, which further created this oversupply situation leading to the collapse in price and reneging of Cobalt contracts by the Chinese at previously higher negotiated prices. (Happened to Katanga last year, and probably another reason why the company had to stockpile cobalt and cut production)

Infrastructure demand for cobalt is some what significant here because if you take a look historically, cobalt spiked in the 2007 even higher than last year because the Chinese were growing and building like crazy. The Chinese market is now switching over this high growth/construction economy  to a more consumer driven economy. The One belt one Road could have potentially could have sustained the high growth (provided that there was global support) but they had to tone down the rhetoric since the US and its ally countries were starting to feel threatened by Chinas increasing global influence in the world. Long story short, I think the US is somewhat insecure about losing its dominant standing in global hegemony, and has been outcompeted in cost of production by China, and therefore  initiated a trade war. IMO TPP would have been a better solution but people were riled up for the wrong reasons and basically will suffer more from the prolongation of the  trade war. Trumps deal (if there is ever one before the 2020 election) will be just as big of a debacle as the whole Brexit issue, showing how global nationalism hurts more than helps all economies.

On the other side, however I would also note that this current bearish market is also speculative as well. Trump, and global populistic sentiment introduced a lot of votality into the market.  The trade war has also turned many investors and traders bearish as well.