Cobalt: prices at low levels due to the good offer, but more and more batteries are being produced
The cobalt price index fell below $3 5,000 per ton in April 2023, its lowest level since 2019. Indeed, while cobalt demand remains broadly stable, there has been a significant increase in supply. Meanwhile, analysts expect demand for refined cobalt, often used in rechargeable batteries, to rise 8% to 205,000 tonnes by 2023. However, they also expect supply to increase by 24% to around 210,000 tonnes.
Forecasts indicate that the Democratic Republic of Congo will supply 180,000 tons of cobalt this year. Not only would this have an impact on the cobalt price index, but it would represent an increase of more than 30% compared to 2022. Furthermore, this figure could rise to around 225,000 tonnes by 2024, a fact that contributes to the sharp decline in prices of the cobalt. While many agree that demand will increase, concerns about this oversupply of cobalt are putting more pressure on prices this year and next. The main world producers of cobalt are:
The world's largest cobalt producers are:
- Democratic Republic of the Congo (DRC), which produces 60%
- Australia
- Cuba
- Russia
- Philippines
- Zambia
- Madagascar
- Canada
- Papua New Guinea
- South Africa
Cobalt is a key component of electric vehicle batteries. Thus, falling cobalt costs are good news for EV companies. EV batteries will be cheaper as prices drop, which could make them more affordable for consumers.
Cobalt controversy
The cathode of lithium-ion batteries, which stores and discharges energy, uses cobalt, hence the need for the metal. Cobalt use is currently most intense in the portable consumer electronics industry. However, the demand and use of electric vehicle batteries is expected to grow over the next ten years. This could have an impact on the cobalt price index in the long run. Despite its obvious value, the sourcing and mining of cobalt has negative effects. This is mainly due to the fact that cobalt mining typically occurs in situations characterized by poor labor standards and poor human rights guidelines. For this reason, obtaining cobalt is quite risky.
For example, in the cobalt mining industry, child labor has historically been a major problem. Additionally, the mining process can have serious negative effects on the environment if not done correctly.
Advantages of using cobalt
Despite these drawbacks, cobalt remains essential for the production of electric vehicles, as it significantly improves battery performance and range. Researchers continue to study other battery metals, nickel, manganese and iron, as potential replacements for cobalt. These metals are more available and less expensive than cobalt and are also commonly used in batteries. However, they may not work as well in electric vehicle batteries due to their lower energy density.
As more nations and companies commit to reducing carbon emissions, many experts predict that the demand for cobalt in electric vehicle batteries will increase over the next decade. Due to disruptions in the supply chain, the cobalt price index has fluctuated in recent years. However, due to forecasts of overwhelming long-term demand, most expect the price to rise, despite the current bearish positioning.
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How demand over the next 5 years could affect the cobalt price index
Current data forecast an increase in the demand for cobalt in the next five years linked to the diffusion of electric mobility. Meanwhile, initiatives such as a shift to low-cobalt battery chemistries will help slow the growth-induced cobalt shift. However, tight supply and increased demand for EVs and battery storage should push the price of the metal further to more attractive levels.
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The article Cobalt: prices at low levels for the good offer, but more and more batteries are being produced comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cobalto-prezzi-ai-minimi-per-la-buona-offerta-ma-si-producono-sempre-piu-batterie/ on Sat, 06 May 2023 09:00:39 +0000.