Note: This article was first published on Trend Investing on Feb. 11, 2018; therefore, all data is as of that date.
The cobalt miners have had a great run since mid 2016; strongly supported by fundamentals such as the cobalt price more than tripling from about USD 10/lb to USD 37/lb. Then in January 2018 the lithium miners rout caused by lithium oversupply fears infected the cobalt miners. I find this particularly strange given cobalt is currently in deficit, and the cobalt price rise accelerated the past 3 months rising ~32%.
In February the global stock market correction of around 10% dragged down the cobalt miners further. The sector has not fallen as badly as lithium, yet bargains have started to appear in a sector that should not be cheap.
Cobalt 1 year spot price chart - Current price = USD 36.97/lb
Source: InfoMine
Cobalt miner fundamentals have been improving
Some recent news includes:
- Cobalt prices are up ~32% in the past 3 months, due to a cobalt deficit.
- In November 2017 Mike Beck stated he sees cobalt prices going much, much higher "in excess of USD 100/lb." (video 15.20 mark)
- In December Morningstar reported: "BMO Capital Markets expects current cobalt prices to double in the next two years as demand for electric-vehicle batteries continues to outstrip existing supply of the metal."
- Bloomberg - "There just isn't enough cobalt to go around - says CRU."
- Global electric cars sales grew 58% in 2017, and H2 was very strong.
- BYD and other Chinese car makers switch from LiFePO4 to NMC batteries as China allows Nickel-Manganese-Cobalt [NMC] to qualify for subsidies.
- Updated January 2018 - PushEVs - "China starts replacing LiFePO4 with NMC for EVs. The Chinese Government has passed legislation that requires EV cells to soon achieve an energy density of 200 Wh/kg. This is simply impossible with the LiFePO4 chemistry, but possible with improved NMC cells. This means that Chinese cell makers will now focus in improving this chemistry to reach the 200 Wh/kg goal."
