Cobalt prices fell to a 10-month low this week due to lower demand from the aerospace and electrical industries – everyone says that V recovery In the world economy there is nothing but a distant dream.
Airlines order reduction for Airbus and Boeing as the travel and tourism industry collapsed. In response, carriers had to quickly reduce the operational capabilities of their ground fleets until passengers recovered.
Boeing CEO Dave Calhoun recently warned it may take 2-3 years for the growth of air travel to return to the pre-Crown level, adding that long-term growth trends can take much longer.
Due to the reduction of flights and the reduction of orders for new aircraft, the demand for cobalt used in the blades of jet turbines will fall at the end of the first half of the year.
“The harsh conditions of high temperature and jet engine pressure require regular replacement of the turbine blades,” said CRU analyst George Heppel. Reuters“But the planes are grounded, the turbine blades are not used and do not need to be replaced.”
According to Heppel estimates, the demand for cobalt for the aerospace industry this year will be about 4442 tons, which is 18% below the level of 2019 and is the lowest since 2011. He predicts an excess of 6,300 tons this year and world consumption in the region of 131,800 tons.
The average spot price for cobalt in the US was $ 15.13, down about 15% since January, reaching a minimum that had not been in ten months. Below are world prices for cobalt, prices fell 4-5 months before the pandemic.
“The pandemic has affected supply and demand. Cobalt mined in the (Democratic Republic of) Congo is usually exported for processing through Durban in South Africa, where a blockage was recorded (to stop the spread of the new coronavirus), resulting in disruptions in logistics, “said analyst Roskill In Lu.
DRC cobalt is used in lithium-ion batteries for electric vehicles. Most of it is exported to China, which suggests that lower spot prices are the result of decrease in electric vehicle sales,
The weakened consumption of cobalt tells us a lot about global recovery – here’s a hint – global stocks mis-evaluate the recovery form, it’s not the letter “V”, but rather “U” or “L.”