Encouraging news with the price of cobalt. Little wonder that...

Encouraging news with the price of cobalt. Little wonder that the SP of CLA has gone down, mirroring the world price of cobalt. So don't blame the CLA Board or BB for the slump in the SP. It's a reflection of what's happening out there in the wider market, and nothing to do with the performance of CLA per se. It seems that this downward trend should reverse by next month. Here's why.

It looks like the price has now stabilised, following recent sharp declines and a 'mixed' (ie. negative) views in the market.Recent negativity stemmed from weaker seasonal demand, a squeeze on credit in China, and inventory sales during a falling market.

Thankfully, the price of cobalt has now stabilised and the prediction is for likely price rises again in August 2018.

A recent (July 2018) Metal Bulletin report from the Antaike’s Battery Materials Conference held in Shangyu, China on18-20 July 2018 had Aaron Cao, president of Shanghai Greatpower telling delegates:

"“We have seen deleveraging and destocking but I believe this period is coming to an end – we’ll see a new round of purchasing in August,” Cao said. “The relationship between supply and demand is quite healthy… the source [of cobalt] is pretty concentrated and demand is strong overall.”

Nothing has fundamentally changed in the cobalt market since prices started to fall, he added.

“When the market is falling, it turns a blind eye to the positive, and when it is rising, it turns a blind eye to the negative,” Cao told delegates.

In addition, Chinese suppliers do not have much in inventories, at least for the domestic Chinese market, which has laid the foundation for a rebound, market participants told Metal Bulletin on the sidelines of the conference.

Visible cobalt stocks fell sharply in recent months, with inventories under the Wuxi Stainless Steel Exchange, the only available platform for cobalt metal futures in China – cobalt metal stocks in its sheds dropped to slightly above 300 tonnes in June from over 1,000 tonnes in March, according to market participants."

So...there seems to be an up-side to the current price fluctuations....but we'll probably have to wait until August 2018 to see any (upward) change in the price of cobalt (and CLA).

In addition to the above, you should also bear in mind that the 2018 subsidies in China are just starting to kick in, promoting the production of high-power and high-energy cathodes for new electric vehicle (NEV) batteries, such as nickel manganese cobalt (NMC)622, 811 and nickel cobalt aluminium (NCA).

Yet it may surprise some to know that at present China still predominantly remains a producer of low-power and energy density cathodes, accounting for over 50% of the country's cathode production. So we'll have to wait while we see a temporary shift in market conditions while traditional producers of low-power and energy density cathodes adjust production and start produce high power and energy density cathodes- which use cobalt.

Once the shift to NMC and NCA battery production in China begins in earnest we'll also be seeing a corresponding up-swing in cobalt prices.

In the meantime, I'll be back to trimming my coffee trees, ready for the next harvest. Likewise, I'll sitting on my current holding in CLA shares, ready for the next SP 'harvest'.