Here is a positive rumour just to show despite my misgivings...

Here is a positive rumour just to show despite my misgivings that all hope is not lost. Katanga will make a massive difference to cobalt price either way.

goodluck


US cobalt prices slip but shortage may be looming

New York (Platts)--23Oct2008
US cobalt prices slipped amid a lack of business and extreme reluctance
of consumers to commit to buying the metal, market participants said Thursday.

The Platts assessment for 99.8% cathode fell to $31.00-33.50/lb delivered
US Thursday from $33.00-35.00/lb a week earlier, with only small volume
business reported. Traders said they had only received an inquiry from another
trader this week for a 750 kg parcel for prompt delivery, while one admitted
selling that quantity at $33/lb delivered US, adding that he was "more than
happy to get rid of it at that price," he said.

Several traders said that prices were likely to continue drifting until
such time as consumers had a better understanding of where the economy was
headed.

A US trader said that one of its long-term contract customers was looking
to delay some deliveries of material to the first quarter of 2009, to help
with its cash flow. The trader said that there had been no cancellations of
contracts. "We have to do it; that's what we're here for, even though it costs
us money," the trader said, adding that there was a general concern in the
market about "push outs" as other consumers sought to delay deliveries.

Meanwhile, a US consumer said that he had taken delivery of a small
volume of Falconbridge brand cobalt under a long-term contract that would be
priced on a formula based on October monthly average published prices. He said
he was obliged to take more material before the end of the year. The latest
volume of cobalt taken under the contract was being used to meet a specific
melt in November. But he said he was not aware of any additional melts
required in the remainder of the year that would use up the cobalt he was
required to take.

"I don't know that I'll be able to push the delivery back into 2009, or
whether I can sell it back," the consumer said.

Despite the dearth of spot market activity, some traders said that the
cobalt market could face severe shortages in the second half of next year as a
result of likely production cutbacks. With copper and nickel prices having
fallen sharply, especially the former in the last week, traders are
speculating that several new projects, with cobalt as a byproduct, will be
canceled, or delayed severely, while some are speculating that existing
production maybe curtailed.

There was some speculation among European cobalt traders that Katanga
Mining in the Democratic Republic of Congo may suspend production as a result
of the collapse in copper prices. Attempts to reach Katanga for comment were
unsuccessful.

Katanga began producing cobalt cathode at the beginning of May and was
expected to produce around 2,700 mt this year, with output eventually expected
to reach a whopping 30,000 mt/year by 2011, making it the largest cobalt
producer in the world. The global market for refined cobalt was balanced in
2007, with production and consumption at about 65,000 mt each. Katanga began
copper cathode production in December 2007.

A European trader said that if the speculation about Katanga was true, it
would have a dramatic impact on the overall supply/demand equation in cobalt
in the future. "That's a huge chunk of cobalt to take off the table," he said.

"I think you're going to see massive cutbacks on copper and nickel
production everywhere," said a second European trader. He said that if the
speculation on Katanga was true, "we could have laid the seed for the biggest
... shortage of cobalt we've ever seen." He added that eventually this would
result in a rapid snap back in prices to record highs that would be
substantially higher than anything seen so far. However, in the near-term, he
said any major production cutbacks would make little difference, because of
the financial crisis and what it is doing to cobalt consumer confidence.

--Anthony Poole, [email protected]

http://www.platts.com/Metals/News/6997702.xml?sub=Metals&p=Metals/News&?undefined&undefined