Cobalt stocks have faced important market trends over the last year. Cobalt is a hard and grey metal that shines and has a high melting pint at 1483 degrees centigrade and is mainly used in the production of superalloys for use in aircraft engines and gas turbine blades, chemicals, carbides, special steel, magnets, and diamond tools. The largest production is in Congo followed by other countries like Canada, China, the Russian Federation, and Zambia.
Supply Issues
In recent years, the demand has gone up significantly due to its use in the batteries for electric cars as well as in other energy-related products. It is the use in batteries which has been increasing its demand the most. The Lithium-ion battery production demands the use of cobalt as well. The largest supplier Congo has been facing issues related to human rights abuses, and this could cause a tightening of the supply from the largest cobalt producing nation in the future.
Cobalt metal is a byproduct which is obtained when Copper and Nickel are produced. Democratic Republic of Congo (DRC) supplies the bulk of it as mentioned earlier. Most of the cobalt is produced in the Copperbelt in the DRC. This area, alone, has got one-third of the global cobalt reserves and as far as the production of cobalt in DRC is concerned, it provides close to 50 % of the total production in Congo.
Conflict Mineral
DRC produced 90,000 metric tons of this metal in 2018 while the Russian Federation has produced only 5,800 metric tons. Australia and the Philippines ranked 3rd and 4th in this regard. Overall, globally, around 12 countries are producing cobalt. As Cobalt from DRC is becoming a bit problematical as some human rights groups are pushing to designate it as a conflict mineral. As many of the cobalt operations in DRC are not managed properly and safely, the groups are insisting on sourcing the metal from other countries.
Supply and Demand Situation
The demand side is mainly influenced by its use in the Lithium-ion batteries. The growth in demand would be substantial. Thus, the supply and demand situation would yoke the cobalt market into a deficit in the future. The demand could go up as much as four times the present levels and could rise to close to 220,000 tons by 2023. If full battery capacities are achieved, it could rise above 275,000 tons by 2028 according to Benchmark Mineral Intelligence.
Futures and Stocks
An investor can invest in Cobalt stocks or futures.; The futures are found at London Metal Exchange (LME), London under the CO ticker. The futures are quoted in US dollars per tonne and contracts can go to as far as 15 months. At present, the cash contract is for $37,500 while a 3-month futures contract is also $37,500. A 15-month contract is for $39,000 to $40,000. The other option left for the investors who wish to invest in Cobalt is to invest in companies mining cobalt. For this prosperity recommended that investors look at copper and Nickel companies as cobalt is a byproduct of their production.
According to Trading Economics, Cobalt price has decreased by more than 31% since early 2019. This data has been obtained from trading on a contract for difference (CFD). The investors can consider both the stock options or futures options.
.
