Wednesday, August 13, 2008
Cobalt's fall continues as market looks for the bottom
Cobalt continued to fall on Wednesday as participants talked about when they will reach the bottom of the market
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Cobalt continued to fall on Wednesday as participants talked about when they will reach the bottom of the market.
“There’s nothing to turn it around, but I’m not as pessimistic as some. My view is that we’re almost there, though the market may not really turn around till mid-September,” one trading source said.
Low-grade prices fell to $26-27 per lb from $27.50-28.50 per lb, while high-grade dropped to $28-29 per lb from $28.50-29.50 per lb previously.
A second trader reported selling five tonnes of high-grade material at $29 per lb, and acknowledged it was a good deal in the current market as BHP Billiton cut its offers again – this time to $29.50 per lb.
“I don’t know what they’re doing,” the first trading source said. “If they really want to make sales, they’re going to have roll up their sleeves and cut their prices to $27.50 per lb.”
One consumer in Europe reported buying 15 tonnes of low-grade material at between $26.25 and $27 per lb, saying “the pressure is not over yet”.
Still, despite reports of aggressive sales from China, there was scepticism about how far and how fast prices have fallen since their peak in April at around $50 per lb.
“I’m waiting for the bottom,” one market participant said. “A price of $26 sounds manipulated. These guys want to drive the price down to buy back in. It’s obvious,” he said.
“It’s bullshit,” he said, adding that he believes the “market is very close to the bottom”.
Consumers were not complaining though. “I’ve had some very good offers,” a second consumer said.
Other traders confirmed that business was done at lower levels, which may presage further falls in the market, with one saying that he had sold 15 tonnes of material at between $25.40 and $25.90.
“We’d make a market [in low-grade cobalt] at $24.50-26.50,” he said, adding that prices will continue to fall.
The second consumer was wondering how much longer prices will continue to fall for, and to what level.
“I know people are saying $18 per lb, but I expect it may fall as low as $20,” he said.
“But when it does start to go up people will have to jump in and buy to cover their short positions and prices will go up [more]. It may bounce in September,” the source added.
