Wednesday, March 3, 2010

Macquaries Predicts Cobalt Surplus

Macquarie Commodities Research is forecasting a medium term for cobalt, in its latest report.

Analysts at the investment bank are predicting that a 10 % increase in supply will outstrip a 9% growth in demand over the next couple of years and that the price will drop from $22.50/lb this year to $20/lb next year and $15 in 2012 thanks to expanded output from Australia, Canada and Africa.

Growth is likely to be underpinned by the automotive battery sector which accounts for about a quarter of demand; however the bank also points out that with cobalt being a secondary product from copper or nickel mines demand has remained insensitive to price.

Macquarie also points to volatility in the price of cobalt, especially as the London Metal Exchange recently launched a cobalt futures contract and contracts exchanged on the market are more likely to be sensitive to market developments.

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