Nickel & Cobalt

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Cobalt prices at $30/lb, highest in 10 years
Thu Nov 30, 2006 11:59am ET

LONDON, Nov 30 (Reuters) - Cobalt prices hit their highest levels in more than 10 years this week as buyers flooded the market with orders after Norilsk Nickel's decision to sell most its output of the minor metal to a chemcials firm.

Traders estimate the bid/offer for high grade cobalt cathodes <COB-CATH-LON> is $30/32 a pound, the highest since February 1996, compared with around $25 a pound last week.

Norilsk (GMKN.RTS: Quote, Profile , Research) for years sold cobalt <COB-CATH-LON> to aerospace, chemical and engineering companies, but from 2007 the Russian company will supply New York-listed chemicals makers OM Group (OMG.N: Quote, Profile , Research) with nearly all of its cobalt output.

"Markets don't often move this fast, there's a lot of people looking for material" a UK-based trader said.

"There was a lot of anxiety that the Russians weren't offering any material out on long term contracts ... Some people haven't been able to book any material for next year."

Cobalt is used in the manufacture of aircraft engines.

Traders say U.S. demand for cobalt has been high and likely to continue strong as the country's government recently passed a budget packed with long military programmes to restock and replace equipment used in Iraq.

Norilsk's deal with OM Group has taken out about 2,500 tonnes of concentrate from the metals market, the trader said. "It's going into the chemicals sector instead."

London-listed BHP Billiton's (BLT.L: Quote, Profile , Research) cobalt prices have jumped this week. BHP's website (http://cobalt.bhpbilliton.com/) reported sales at $30 a pound on Monday compared with sales at $21 and $25 a pound last week.

BHP was last offering 5 million tonnes at $33 a pound.

Elsewhere indium <IND-ING-LON>, used in the manufacture of liquid crystal display screens, rose to around $700 a kilogramme from $680 last week, but news that a Japanese chemical maker had developed a substitute was weighing on the market, traders said.

Japan's Tosoh Corp. (4042.T: Quote, NEWS , Research) said this week it has developed a low-cost alternative to an indium-based material used in the production of liquid crystal display (LCD) panels.

A company spokesman declined to say how much in cost saving the new zinc-based product would result in for LCD panel makers, which currently use indium tin oxide (ITO) target for the assembly of transparent electrode membrane inside LCD panels.

"I don't think it will make any difference in the near future," a Europe-based trader said. "But in the long term who knows, we could see further losses."

Indium prices have fallen more than 30 percent since record highs above $1,000 a kilogramme in March 2005.

Germanium metal <GERM-LON>, used in military equipment such as tanks and helicopters for cameras and surveillance equipment, is holding firm near six year highs around $950 a kilogramme, traders said.

"It's demand from the United States, higher spending on military equipment," the trader said.

Germanium dioxide <GERM-DIOX-LON> was steady at around $675 a kg (2.2 lb), the highest since late 1999.

Traders said producers were trying to negotiate 2007 contracts for germanium oxide at $700 a kilogramme.

Bismuth used for treating ulcer-causing bacteria continued its run of price rises to hit a new record high of $6.20 a pound.

"The Chinese are getting more aggressive," the UK-based trader said. "The mines are making money, demand looks good."

Reuters 2006. All Rights Reserved.
http://today.reuters.com/news/articleinvesting.aspx?view=CN&symbol=&storyID=2006-11-30T16585...