August 13, 2019 / 4:40 AM / a month ago

Cobalt price to jump 60% in next 18 months to $20/lb- UBS

MELBOURNE, Aug 13 (Reuters) - * Investment bank UBS said on Tuesday that the shuttering of top cobalt producer Glencore’s Mutanda mine in Democratic Republic of Congo should trim an expected market surplus over 2019-2023, moving the risk versus reward for cobalt prices “firmly to the upside.”

* “We expect the cobalt price to increase around 60 percent over the next 18 months back to $20 a pound. We see further material upside in 2024-2025 when the market is set to move into a deficit” it said in a research note, acknowledging the possibility that supply from DRC could fill the gap.

* Cobalt prices peaked above $43 a pound in March 2018 before collapsing 72% to $11.80/lb in late July. Since Glencore’s announcement, prices have recovered to $14.30.

* UBS said it sees DRC politics as a key supply risk in the near and medium term given the country’s new prime minister and a new mining code.

* UBS’s satellite images show that development of two major privately owned cobalt projects, Mutoshi and Deziwa, are ramping up for production in H2 next year with Mutoshi slightly behind schedule.

* UBS forecasts electric car penetration to reach 17 pct or 17 million vehicles in 2025 and for cobalt demand to grow to 270,000 by then from 130,000 currently.

Reporting by Melanie Burton; editing by Richard Pullin

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