COPPER (Cu) PRODUCERS

[NYBob]

Cobalt to see structural price recovery in 2013:
Darton Commodities

The fundamental outlook for the cobalt market improved in 2012 and a structural price recovery is likely this year, UK-based trading company Darton Commodities said in its 2012-2013 cobalt market review.

"Whilst 2012 will not be remembered as the most exciting year for cobalt price wise, fundamentally the blue metal probably grew stronger and the seeds for a robust recovery in prices were sown," Darton said in the report issued earlier this month.

According to Darton, there was a 5% drop in global cobalt output last year with new projects forecast to come on-stream in 2012 failing to meet production deadlines.

During 2012, refined cobalt supply dropped an estimated 3,839 mt to 76,040 mt, 4.8% below 2011.

Cobalt metal production (excluding powder) dropped an estimated 6.9% to 28,720 mt, while production of cobalt chemicals and specialty products reached an estimated 39,220 mt, down 2.5% year-on-year.

"Only a fraction of the new and additional production that was previously forecasted to come on stream in 2012 materialized with only Ambatovy and Ramu being commissioned late in the year," Darton said.

In terms of demand, global cobalt consumption grew an estimated 6.8% 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, Darton said.

Likewise, demand from the superalloy sector continued to see strong growth from the aerospace and industrial gas turbine markets, with demand reaching 14,800 mt.

"Whil[e] the short-term outlook for the superalloy sector continues to be influenced by prevailing economic uncertainty, most superalloy producers anticipate continued and strong demand growth from the aerospace sector in the coming years," Darton said.

Strong demand growth in 2012 saw significant destocking of cobalt materials in China over the year.

At the end of 2011 it was estimated that China had stockpiled 25,000 mt of cobalt in raw materials and refined downstream products.

In November 2012, China research consultancy Antaike suggested that China had destocked as much as 9,300 mt of this material over 2012.

Darton estimated cobalt demand in China increased 13.7% from 2011 to 28,900 mt in 2012.

"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," the company said.

Darton expects cobalt prices to recover from the low levels seen at the end of 2012 when Platts assessment for 99.3% cobalt metal was in a range of $10.30-10.80/lb.

Darton is forecasting cobalt metal to trade in a range of $12-13/lb and $15-16/lb in 2013 with a strong likelihood that prices will push through the higher end of the range.

In October, Darton signed a multi-year marketing and distribution agreement with Dynatec Madagascar to promote exclusive use of Ambatovy cobalt products in Europe and India.

Ambatovy is a joint venture mining and refining company in Madagascar, specializing in lateritic nickel mining.

Ambatovy is expected to have an annual capacity of 60,000 mt/year of LME-grade nickel, 5,600 mt of refined cobalt and 210,000 mt of ammonium sulphate fertilizer.

--Greg Smart, [e-mail]
--Edited by Jeff Barber, [e-mail]

Visit the Platts Website for this and other articles.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=83850711