Will cobalt have its own ‘lithium moment’ in 2022?
Lithium had a spectacular 2021. According to Benchmark Mineral Intelligence, the lithium price index was up 240% year-to-date to the start of December, and still rising.
Records continue to be broken.
Fellow battery metal cobalt also had a strong second half of 2021, rising for 100 consecutive days to hit more than US$70,000/t in December.
— Peter Hannah (@PHmetals) December 9, 2021
Unlike lithium, however, cobalt prices remain well below record levels.
While Fastmarkets is predicting prices to taper in 2022, Argus says the best could be yet to come; in the US market, anyway.
US customers are increasingly asking for fixed price contracts, Argus says, which happens when they anticipate steadily rising prices rather than volatile swings in prices over the course of the year.
Two things: a recovering US aerospace sector and lithium-ion battery demand.
Market participants anticipate higher cobalt prices is because of increased demand from aerospace sectors that were hit hard by the Covid-19 pandemic and related restrictions, Argus says.
“This sentiment comes as Boeing, one of the largest aircraft manufacturers, plans to increase production of the 737 MAX to 31 planes/month in early 2022 from its recent rate of 19 planes/month at the end of the third quarter,” it says.
”Airlines that buy these planes are recovering from the economic downturn brought on by the Covid-19 pandemic in 2021, a trend which is forecast to continue in 2022 and will support aerospace manufacturing.”
And increased future chemical demand is expected from US EV battery manufacturing plants that will start in 2022.
“General Motors (GM) plans to open a 30 GWh/yr lithium-ion battery plant in Lordstown, Ohio, in the first quarter of 2022, the first of two planned facilities together with South Korean battery maker LG Chem,” Argus says.
“SK Battery also plans to open a 9.8 GWh/yr plant in Jackson County, Georgia, in 2022, the first of two plants on this site.”
While lithium-ion batteries consume cobalt chemicals such as cobalt hydroxide or sulfate rather than cobalt metal, higher demand for cobalt chemicals can support cobalt metal prices, as metal refiners use these chemicals as feedstock, Argus says.
“This combination of returning aerospace demand and new demand from battery manufacturing should provide support to cobalt’s upward trend into 2022.”