Benchmark forecasts stronger cobalt prices going into 2020https://stockhead.com.au/resources/benchmark-forecasts-stronger-cobalt-prices-going-into-2020/
That’s because Mutanda produced 27,300 tonnes of cobalt last year — about 20 per cent of global production, and enough for 2.5 million electric vehicles using today’s technology.
There’s a five-month window between the announcement and closure at the end of year. That means Glencore could reverse the decision — but it seems very, very likely to go ahead, says Benchmark Minerals Intelligence senior analyst Caspar Rawles.
“The information I have suggests that [Glencore] is already ramping down production,” he told Benchmark World Tour 2019 attendees in Perth.
“We expect the mine to be closed for about two years. In that time, cobalt demand will have grown enough that switching it back on won’t flood the market.”
.......Pre-Glencore supply cuts, Benchmark predicted the cobalt market would be oversupplied until sometime in 2022/2023. That picture has now changed.
This supply curtailment means the market will be eating into those hefty cobalt hydroxide stockpiles.
“In 2020 we think the market will be supplied from ongoing production and stockpiles, but from 2021 onwards there is a question about how well supplied the market will be,” Rawles says.
“And DRC supply is anything but certain. We could be looking at a tighter supply picture going forward than previous expected.”
That’s had a major impact on sentiment already. As part of his role, Rawles speaks to a lot of people in the supply chain – including large downstream buyers.
“In negotiations for next year’s annual supply contracts, cobalt producers have already asked for more favourable terms,” Rawles says.
“It looks as if we will have a higher priced environment going into 2020.”