Cobalt pricing Cobalt Outlook 2021: Demand to Rise, Higher Price Environment Ahead
Cobalt outlook 2021: Supply and demand
Demand for cobalt is mainly driven by the EV sector, which had a strong finish in Q4 2020.
Roskill expects global EV sales for the year to increase by 10 to 15 percent year-on-year, with Europe being the largest-growing EV market globally.
“Such rapid demand growth in Europe has mainly been supported by massive fiscal incentives implemented by various countries across the continent, such as Germany and France,” Ying Lu of Roskill explained to INN via email.
For cobalt, Benchmark Mineral Intelligence expects demand to continue to rise into 2021.
“(This) not only as EV sales continue to surge, but due to a number of reasons,” Rawles said. “We are continuing to see a delay in the shift to high-nickel (less cobalt-intense) cathodes, which adds to the demand outlook.”
Additionally, the firm expects to see further growth from the consumer/portable electronics industry, not just linked to the virus, but also to the ongoing rollout of 5G devices.
“On top of battery demand, assuming the vaccine programs continue to move from strength to strength, we could also start to see some improving demand from the aviation sector in H2 2021,” Rawles said.
Across all end markets, Benchmark Mineral Intelligence forecasts that cobalt demand will increase by 15 to 20 percent year-on-year, with the majority of this driven by the battery sector.
Commenting on demand, Heppel of CRU said the biggest COVID-19-related impact on cobalt this year was the “green recovery” policy drive seen in many western countries in response to the recession.
“This has given a tremendous kickstart to the European EV market, which looks poised to overtake China in terms of annual sales next year. Although some of these policies will be scaled back in the coming years, we believe that the decline in the average price of EVs will mostly make up for the subsidy decline.”
Elsewhere, the other key growth market is China, which CRU believes will return to growth in 2021 after several years of stagnant EV sales.
In 2020, the supply side of the cobalt market was less resilient to COVID-19 impacts compared with the demand side.
Last year saw the temporary shutdown and suspension of a number of operations in Africa in H1. During that time, only 30 to 40 percent of refining capacity in China was operational, according to Roskill.
“Consequently, both mined and refined cobalt supply fell in 2020, marking the first decrease in global production since 2016,” Lu said.
Moving to 2021, Roskill is expecting production of cobalt feedstocks to increase back to pre-COVID-19 levels, should several projects in the DRC continue to ramp up output as scheduled.
“This could largely offset the output loss from Mutanda should the mine remain closed in 2021,” Lu said. “Projects at earlier stages may, however, face further delays given the macroeconomic situation remains uncertain.”
Speaking about supply, Rawles said growth will be needed next year if supply and demand have any chance of being roughly balanced.
“There are a number of ramping projects in the DRC, including Phase 2 at Eurasian Resources Group’s RTR operation and China Nonferrous Metal Mining (Group)’s Deziwa, on top of the restart of Ambatovy in Madagascar,” he said. “In percentage terms, we see supply growth slightly below demand, tightening the market on 2020 levels.”
For Heppel, supply growth looks healthy for now, with CRU expecting cobalt mined supply to grow by 13 percent in 2021.