By Karan Kumar - Exclusive to Cobalt Investing News
Cobalt prices have been losing strength this year due to an oversupply of the minor metal and an expected surplus from new projects scheduled to start production in 2012. A London-based trader told Platts earlier this month that about 200 metric tons of cobalt had been offered on a long-term and spot basis in a two-day period. “It's quite a lot of material,” the trader said, adding that everyone is trying to get ahead of the curve by liquidating stocks before new production hits the line. The trader said that while prices were high in January, driven by good demand from the superalloy sector and tight high-grade availability, prices have lost momentum. “We could be knocking on the door of a possible real rundown.” Another industry source, who requested anonymity, told Cobalt Investing News in an interview that an oversupply of cobalt - which is primarily a by-product of nickel and copper mining - has come about due to “quite a few copper projects coming on board. Demand for cobalt has also increased, but there is also a lot of extra cobalt.” London-based CRU said in a recent report that cobalt markets are going to continue to suffer from oversupply and weak prices this year and next. CRU's report, quoted by Metal-Pages, said demand for cobalt will continue to rise at about seven percent year-on-year to over 100,000 tonnes by 2016, driven mainly by demand for chemicals for the battery industry and superalloys for aircraft engines. At the same time, cobalt production growth will be aggressive due to ambitious projects with production exceeding 100,000 tonnes annually coming online. The market went into oversupply by 2,000 tonnes in 2011 and is expected to remain in this state, peaking this year at a potential 7,000 tonnes, and falling to over 3,000 tonnes in 2016. Prices are expected to remain under pressure and are forecast to average $13.50 a pound this year and $12.50 a pound in 2013.