The electric car pushes cobalt prices

The electric car pushes cobalt prices

October 27, 2017

stefano.sparacca@prometeia.com

The metal, the main input in batteries production, is extracted in Congo mines

Since the beginning of 2017 prices of cobalt, the main input in electric vehicles lithium ion batteries production, have shown a bullish dynamic (see Fig.1), jumping by around 80% between January and October.

 
Fig.1: Cobalt prices since 1/1/2016
Source: Eikon, Us$/MT
 

This trend is mainly due to the car-makers attempt to secure additional stocks of this metal as they expect a strong electric vehicles demand in the next 20 year. However, Bmw, Nissan, Volkswagen, Tesla have to bargain with the few cobalt producers (Glencore, China Molybdenum ed Eurasian Resources Group among them) operating in the Democratic Republic of Congo, one of the most unstable African states, with poor infrastructural endowment, which account for more than 60% of global cobalt supply. As in recent months the excess demand push on prices has been amplified by financial speculation, fears have arisen about the potential negative impact of additional increases on electric vehicles market. But at the moment this seems unlikely, especially in the light of big players’ projects to add new capacity. 

Moreover, as in the rare earth case, input factors in several technological applications, leader companies are investing in alternative solutions like higher nickel batteries that use less cobalt. This is making producers more prone to cooperate with car-makers by adopting long term agreements to reduce price volatility. 

All these factor together should contribute to a price stabilization in the next months. In a long term perspective, it seems clear that the cobalt market evolution will be indissolubly linked to the electric car future.