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Global Cobalt Demand Increased to 175,000 Tons, Electric Vehicles Became the Largest Source of Demand for the First Time

Industry information
2022/05/20 10:00

According to the Cobalt Market Report released by the Cobalt Institute on May 17, electric vehicles have surpassed smartphones and personal computers to become the largest source of cobalt demand for the first time.


The report pointed out that global cobalt demand will increase by 22% to 175,000 tons in 2021, a record high growth rate, and this upward trend will continue. Electric vehicles will consume 59,000 tonnes of cobalt in 2021, accounting for 34% of total demand, as sales of electric and hybrid vehicles double; cobalt demand for mobile phones is 26,000 tonnes; and laptops and tablets are 16,000 tonnes.


The Democratic Republic of Congo remains the largest source of cobalt supply, accounting for 74% of global mineral supply. China remains the world's largest cobalt refiner (72% of primary production). Indonesia is the largest refined cobalt production growth market after China and is expected to account for a quarter of total refined cobalt growth over the medium term.


In 2021, cobalt-containing battery chemistries will account for three-quarters (74%) of the global EV battery market - largely due to cobalt ensuring its superior energy density, safety and performance.


"As electric vehicles continue to revolutionize green and sustainable transportation, cobalt-containing batteries are the technology of choice for many automakers in Europe, North America and China," said Adam McCarthy, director of the Cobalt Institute.


David Brocas, head of cobalt traders at Glencore and chairman of the Cobalt Institute Executive Committee, said: “Ensuring access to raw materials is critical if the world is to make a sustainable and just transition to a greener future. Its role in recycling makes it one of the key materials for a climate-neutral future."


The report expects cobalt demand to rise to 320,000 tonnes over the next five years from 175,000 tonnes in 2021 as the auto industry produces more electric vehicles. While cobalt supply is expected to increase this year and into 2023 and the market is more balanced, supply will start to slow from 2024. "From 2024 to 2026, supply will increase by an average of 8% per year, while demand will increase by more than 12%." The report also said that by 2026, electric vehicles will account for half of cobalt demand.


In terms of price, according to data released by wind, the average price of cobalt ore in 2021 will rise to 378,000 yuan / ton, a year-on-year increase of 41.4%. At the end of 2021, the domestic electric cobalt price was 491,000 yuan / ton, a year-on-year increase of 76% and a new high since 2019.


Driven by demand and sharp fluctuations in raw materials, auto giants also paid attention to cobalt resources in the mining boom.


On April 12, General Motors issued a statement saying that the company had reached a cobalt supply agreement with Glencore. The Murrin Murrin mine in Australia will supply GM with cobalt over several years under the agreement, which did not specify the amount or price.


GM plans to use cobalt, an extremely heat-resistant metal, in its own batteries that are expected to power electric vehicles such as the Chevrolet Silverado EV, GMC HUMMER EV and Cadillac LYRIQ.


On March 21, Volkswagen Group (China) announced that it had signed two memorandums of understanding on strategic cooperation with Huayou Cobalt and Tsingshan Group, and planned to set up a joint venture with the latter in Indonesia and Guangxi respectively, to further consolidate the domestic market. Position in the battery value chain.


According to the information disclosed by Volkswagen China, Volkswagen, Huayou Cobalt and Tsingshan Group plan to establish a joint venture company in Indonesia. It is expected that the total raw material production capacity of the joint venture company can meet the supply of nickel and cobalt raw materials required by 160GWh batteries after full production; In addition, Volkswagen also plans to establish a joint venture with Huayou Cobalt, specializing in nickel and cobalt sulfate refining, precursor processing and cathode material production, to help Volkswagen further optimize battery costs.


In addition, as early as 2020, Tesla purchased cobalt raw materials from Glencore, the world's largest metal miner. According to the long-term cooperation agreement between the two parties, Glencore will supply Tesla with 6,000 tons of cobalt per year.


The latest quotation from the business agency shows that the cobalt price fell sharply on May 17, and the cobalt market fell. On May 17, the cobalt price was 500,300 yuan/ton, down 2.00% from the previous day's cobalt price of 510,500 yuan/ton.


According to the analysis of the business agency, the cobalt price in the LME market has fallen sharply, the international cobalt price has fallen sharply, and the price difference at home and abroad has weakened; the proportion of ternary battery installed capacity has declined, and the demand in the cobalt market is lower than expected. Tesla has resumed work and production in Shanghai, and the inflection point of the epidemic is temporarily. It is not clear, the large-scale resumption of work and logistics and transportation of enterprises have not yet fully recovered, and the recovery of demand in the cobalt market is less than expected; the price increase of new energy vehicles is transmitted to the terminal, and the sales of new energy vehicles are lower than expected. The price of cobalt salt fell sharply, the metal cobalt was involved and fell, and the pressure on the price of cobalt increased.


Essence Securities said that the short-term cobalt price will be affected by the weak consumption of digital and power electronics and the expected increase in supply in the short term. With the resumption of downstream production and digital electronics gradually coming out of the off-season, cobalt prices are expected to remain high on the back of low raw material inventories.

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