Don’t count on another cobalt run, though.
Despite the base metal now widely being touted as a battery play (precisely how I described it mid-2017), the story hasn’t changed. Cobalt has nothing to do with electric cars as most analysts suggest.
The mainstream opinion is seriously flawed…
Cobalt’s price jumped purely because civil unrest broke out in the Democratic Republic of Congo (DRC) — the world’s largest cobalt supplier — in December. The country’s president, Joseph Kabila, refused to step down when his constitutional mandate expired.
Take a look at the cobalt price chart again.
You can see the cobalt price took off around that time, in December. Joseph Kabila’s actions resulted in massive turmoil, which saw policemen decapitated and dozens of protestors killed.
Here’s the latest news, via Deutsche Welle on 9 July:
‘A vote to replace Congo’s president Joseph Kabila might not be possible this year, the head of the electoral commission said. Opposition leader Felix Tshisekedi said it was “a declaration of war on the Congolese people.”’
It’s clear why cobalt prices remain elevated. Mark my words: Cobalt prices are likely to drop like a rock if the situation in the DRC sorts itself out.
Now, while there’s no knowing if that will happen, common sense says it won’t be sorted out soon. If the political situation worsens, cobalt could see a second run. But cobalt needs to break through US$30 per pound at the very least. And while that could happen, I’d still avoid the sector for now.
Remember, cobalt stocks ran hard when the cobalt price skyrocketed from December to February. In my view, cobalt will need to run just as hard again to produce another stellar run.
I'm leaning more toward 'another stellar run' than 'drop like a rock' .......
I got that email on cobalt today and cannot believe that the rise in cobalt price is (mainly) due to a supply issue, rather than increasing demand.
I would be interested if others see the rise in price as a result of supply concerns, more so than a rising demand? Are we going to see a huge drop in price if the DRC settles down?
