Cobalt: Demand growth led to a gradual but significant destocking in China

In the Swedish capital Stockholm, the chemist George Brand was able to discover andcobalt name a new element, which is still considered very rare: Cobalt, which is mainly extracted from copper or nickel ores. Cobalt steel is one of the hardest alloys and used, inter alia, for drill bits and milling. But it is also used for highly stressed parts in mechanical engineering, for example in propellers or aircraft turbines. Its potential use as an alloying element and cobalt compounds has made the raw material to become a strategically very important metal.

Key findings of a recent cobalt market report by  Darton Commodities:

  • The fundamental outlook for the cobalt market improved in 2012
  • A structural price recovery is likely in 2013 as there was a five percent drop in global cobalt output in 2012
  • During 2012, refined cobalt supply dropped an estimated 3,839 mt to 76,040 mt, 4.8 percent below 2011
  • Global cobalt consumption grew an estimated 6.8 percent in 2012, reaching 73,900 mt
  • Consumption from the battery sector saw robust growth on the back of demand for tablet and smart phone devices, with cobalt usage breaching 30,000 mt
  • Demand from the super-alloy sector continued to see strong growth from the aerospace and industrial gas turbine markets, with demand reaching 14,800 mt
  • Strong demand growth in 2012 saw significant destocking of cobalt materials in China over the year
  • Darton estimated cobalt demand in China increased 13.7 percent from 2011 to 28,900 mt in 2012

Swissmetal Inc. offers Cobalt as part of its “Construction & Engineering Basket”. A turnkey  solution for procurement and storage in a private, insured, overseas vault.

“Demand growth led to a gradual but significant destocking of both unrefined and refined cobalt materials in China. Consequently, the overall supply and demand imbalance which has undermined the cobalt market for the past couple of years appears to have been restored resulting in a fundamentally more balanced market outlook for 2013.” Darton Commodities

The Democratic Republic of the Congo (DRC) supplies 55 percent of the world’s cobalt. With much of the world’s incremental supply over the coming years expected to be sourced from the DRC expectations might be too high. Crisis in the Congo is giving ahead of the herd investors an exciting investment opportunity.

Between an outright ban on the export of raw minerals, project ownership grabs, power shortages and armed conflict the DRC’s resource sector is imploding. Most of the DRC’s cobalt goes straight to China who refines it and sells it to the world, a major amount – 20 percent – goes to the U.S. which imports 85 percent of its cobalt needs, expect both countries to be screaming for cobalt as a supply crunch gets underway because of the ongoing Congo drama.

The supply side of cobalt is shrinking while demand increases and security of whatever supply there is, is far from assured – perfect storms that bode well for investments in this metal.

Click here to contact Swissmetal Inc. for free information on how to purchase and store this rare metal as a method of asset protection and wealth preservation.

Source: Darton Commodities Ltd.