Cobalt Price Forecast Raised 67% by Credit Suisse as Use Surges...

Cobalt Price Forecast Raised 67% by Credit Suisse as Use Surges

By Alistair Holloway

April 13 (Bloomberg) -- Credit Suisse Group raised its price forecast for cobalt, a metal produced as a byproduct of copper and nickel, by 67 percent because of rising demand for the metal in the aerospace and gas-to-liquid industries.

Cobalt will average $25 a pound this year, compared with a previous forecast of $15, Switzerland's second-largest bank said in an April 12 report. Cobalt with 99.8 percent traded this week at $30.625, according to data from publisher Metal Bulletin. Prices may rise to $40 by the end of 2007, Credit Suisse said.

The metal is an ingredient in high-temperature alloys used in jet engines. Cobalt is also used in catalysts that help to turn gas into liquid fuel, and in rechargeable batteries.

The bank said it expects ``new demand from emerging markets, such as China and India, where the launch of low-cost airlines in air travel and mobile phone usage are set to multiply among an expanding middle class.''

Cobalt stockpiles will fall and potential supplies for new projects may be delayed, London-based Credit Suisse analysts Eily Ong, Jeremy Gray, Hannah Kirby and Ephrem Ravi said in the report. Demand will exceed production through to the end of 2008, due to limited new production starting up, Credit Suisse said.