Since the beginning of this year, the supply of cobalt metal has seen a significant increase and this trend is expected to continue in the coming years. As cobalt metal producers expand and start new production, the premium of cobalt metal over cobalt salt in China is expected to gradually narrow by 2024, and the price difference may even flatten.
There were reportedly five major cobalt metal producers in the country in 2021, while this number increased to eight by 2023. Four new producers are also expected to join the market by 2024. Meanwhile, annual domestic cobalt production capacity is rising year on year, from 14,600 tonnes in 2021 to over 40,000 tonnes in 2024.
Looking at data from the beginning of this year to 15 December, the average price of cobalt in China was RMB 274.3 per kilogram, while the average price of cobalt sulphate was RMB 38.8 per kilogram during the same period. When converted into metal price, the average price of cobalt sulphate was RMB 189.2 per kilogram. As a result of the rapid growth in the supply of cobalt metal, it is expected that the price differential between the two materials will narrow, or perhaps even level, in the coming year.
This trend has had a significant impact on the cobalt market. For producers, with the release of new production capacity, the market will become more competitive and profit margins may be compressed. As for consumers, the narrowing of the price difference will reduce production costs, which is expected to boost the development of related industries.
Looking ahead, the cobalt metal market will continue to be driven by the global electric vehicle and renewable energy industries. As these industries grow, demand for cobalt will continue to grow. Increasing supply and flattening spreads will also have an impact on the market.
