Katanga Mining Ltd Ord KATFF

Analyst says tighter cobalt market swings sentiment

[Sogosohubidu201]

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/54338255

However, following Glencore's announcement, which will mean taking production out of the market for the two years Benchmark believes that Mutanda will be out of action, Rawles said "it looks like 2020 we'll be in a big deficit," then from 2021 onward "there's a question of how well supplied the market will be."

While prices will react, Rawles said that by the time Mutanda comes back online, cobalt demand would have grown enough that the resumption would not flood the market.

The only unknown factor is how quickly the other Congo operators can respond, but Rawles said there have been problems on that front.

He also cited Eurasian Resources Group SARL's Metalkol RTR project, which Rawles said has had problems ramping up, while Chemaf SPRL's new cobalt hydroxide refinery in Congo was also expected to come online this year but is now looking like it will not arrive until 2021.

Thus Congo's cobalt supply is "anything but certain, and we're looking at a tighter picture going forward than previously expected," Rawles said.

"Sentiment has begun to swing in producers' favor," he said, adding that 2020 contract negotiations have already been impacted.