Analysis on Production Volume and Market Concentration Rate of Global Cobalt Industry
Congo-Kinshasa has the world’s largest reserves of cobalt ores, representing 50%. The country also ranked first in terms of production volume of cobalt ores. Its annual production volume of cobalt maintained between 70,000 tons and 90,000 tons for the previous three years, accounting for over 70% of the global volume. The ore grade of cobalt in Congo-Kinshasa is mainly evaluated between 0.3% and 0.5%, much better than that in other places of origin. Generally, 8%-10% of local ores are for open-pit mining.
It is estimated that the added global production capacity of refined cobalt will be 12,000 tons and 11,000 tons in 2018 and 2019 respectively at corresponding growth rates of 11.89% and 8.99%.
Related report: Report on Global and China’s Cobalt Industry, 2018-2022
According to industries, global downstream consumption of cobalt can be classified into lithium battery, high-temperature alloy, cemented carbide, magnetic material and other industrial demand. Demand of lithium batteries mainly includes that of 3C electronic consumer goods and new energy vehicles. High-temperature alloy usually functions as irreplaceable materials of high-temperature heated end components such as aviation engines, rocket engines and combustion turbines. Thus, cobalt based high-temperature alloy plays a significant role. Other industrial demand includes traditional demand of hard surfacing materials, pigments, catalysts and organic materials, exhibiting comparatively stable growth rates.
With emergence of consumption of new energy vehicles, the global consumption structure of cobalt has changed significantly. The proportion of new energy vehicles ascended from 4.0% in 2014 to 13.4% in 2016 and is expected to reach 22.7% in 2018. Change of this industrial structure suggests that the accelerating demand for new energy vehicles will greatly facilitate demand for cobalt and exert certain impacts on the cobalt price.
In 2016, 104,500 tons of cobalt were in demand globally, up by 9.90% YOY. Specifically, demand of new energy vehicles was 13,900 tons, that of 3C electronic consumer goods was 37,700 tons, that of high-temperature alloy was 16,100 tons, that of cemented carbide was 8,600 tons and industrial demand was 20,600 tons. Global demand for cobalt is expected to be 114,900 tons and 127,800 tons in 2017 and 2018 respectively, at corresponding growth rates of 9.99% and 11.26%.
Driven by new energy vehicles, global demand for cobalt grew at a rate of 9.90% in 2016. The global demand volume of cobalt was 104,500 tons in 2016, among which demand volume of power battery materials was 13,900 tons at a growth rate of 74.81%. Supply shock along with fast growing demand reversed the supply-demand relationship of cobalt in 2016, leading to shortage of cobalt. The era of scarce cobalt has approached. Increasing demand and supply shock resulted in supply shortage of cobalt of 3,300 tons and continuously rising price of cobalt in 2016.
The added global supply of refined cobalt is projected to be limited during 2017-2019. In the following three years, there will be a limited number of new cobalt ores and refined cobalt projects but demand for cobalt will keep growing fast. Considering limited recovery of output volume of hand-grabbing ores, it still takes time to improve the pattern of shortage. We predict that the growth rate of the global supply of refined cobalt will be 8.11%, 11.89% and 8.99% respectively from 2017 to 2019, with corresponding demand volume of refined cobalt being 109,300 tons, 122,230 tons and 133,300 tons.
Global demand for cobalt will continue to rapidly expand in the next two years owing to strong demand for new energy vehicles. The growth rate of global demand for cobalt is expected to reach 9.99%, 11.26% and 15.02% respectively from 2017 to 2019, with corresponding demand volume of refined cobalt being 114,900 tons, 127,800 tons and 147,000 tons.
Cobalt is likely to be in short supply in the global market during 2017-2019, with price constantly rising. We project that the shortage volume of cobalt metal will be 5,600 tons, 5,500 tons and 13,700 tons in 2017, 2018 and 2019 respectively and that the cobalt price will remain strong.
