April 2, 2015
ENRC news of Chambishi Shutdown Brings Cobalt Bulls Hope of a Price Floor
Cobalt's losing streak may have continued this week, but an imminent shutdown at Chambishi brought talk of a floor, and potential price rises, in weeks to come.
....ENRC plans to stop production of Chambishi cobalt metal for three months, as it builds up stocks of sulphide ore, market sources told Metal Bulletin this week. Production of more than 1,000 tonnes of metal is expected to be affected by the shutdown in Zambia, and about 700 people will be put on temporary leave, sources said.
...the company is expected to be out of the spot cobalt metal market for the time being, and will look to meet its long-term demands with stored metal.
All eyes in the cobalt market were on ENRC during Metal Bulletin's mid-week pricing calls. The news of the metal production curtailment was welcomed by the bulls, who have suffered greatly this year after prices were smashed by oversupply and weak spot demand.
"I imagine the news will have some influence," one quoted trader said. "Those who had offers on the table will probably take them, and others will raise their prices. We'll be looking to raise prices."
Another trader stated, "The bears will be off to hibernate," This is the cheapest cobalt is going to be for five years." ... "In the next month, it could go to $15, and I wouldn't be surprised if $18 is tested this year and $20-25 next year," he said.
The trader pointed to strengthening demand from the battery sector, with Tesla's expansion in the electric vehicle market likely to drive up cobalt demand in the long -term.
A producer also highlighted the gap in supplies that was at stake. "Chambishi produces 10% of the world supply of metal. If that's disappearing overnight, it's going to have a big impact," he said.
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