Battery Materials Update: Have Cobalt Prices Bottomed Out?

It has been a bit more than one month since Cobalt 27 and Wheaton Precious Metals entered into the largest cobalt streaming deal in history with Vale. The $690 million streaming transaction was viewed by many as a move into the institutional markets for cobalt as a traded metal. However, global uncertainty in markets around the world led to softening of prices and resolve about cobalt and other new technology metals. Cobalt traded for $43.32. per pound at its peak in 2018. The recent price was $31.75, a price that is almost 27% lower than the peak price.  Even at recent prices, cobalt is trading at a 300 percent premium over the historic price of $10 per pound.  The question on everyone’s mind is whether the new base price in the $30’s is sustainable.  Certainly, Cobalt 27 and Wheaton Precious Metals believed continued grow in the electric vehicle market would drive demand.

Talk at the Antiake Battery Confence in China was mixed. Metalbulletin.com reports “Chinese cobalt prices have stabilized recently, against a persistent downswing in international cobalt prices that made market participants believe the blue metal and its downstream salts’ prices have bottomed out in China, creating mixed views in the market.”  While cobalt is an important part of electric vehicle batteries, there are technology changes on a global level.  Reuters said “Changes to the Chinese government’s electric vehicle (EV) subsidy policy have necessitated investment in nickel-rich battery chemistries, as companies battle to avoid being left behind, according to Aaron Cao, president of Shanghai Greatpower.”

The stakes are high on the global cobalt market.  Cobalt 27 stock was trading at C$7.46 in midday trading on Monday, July 23.  The timing could not be worse given the fact that Cobalt 27 concluded a “bought deal” for C$300 million at C$9.75 on the heels of the Vale cobalt transaction.

 

 

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