Rising supply seen pressuring cobalt in second half 2013 -trade

Tue Feb 26, 2013 9:12am EST
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* Cobalt prices rebound off lows, weaker H2 seen

* Madagascar's Ambatovy shipment delay seen as temporary

* Large stocks of cobalt feed accumulate in China

By Harpreet Bhal

LONDON, Feb 26 (Reuters) - A surge in supply is likely to put cobalt prices under pressure in the second half of this year, wiping out recent gains in the minor metal used in rechargeable batteries, traders said.

Prices for cobalt hit a low late last year as producers liquidated stock ahead of the holidays, but they have since begun to rally due to delayed shipments from Madagascar's Ambatovy mine and a pick-up in buying activity in the new year.

The bottleneck affecting Ambatovy is seen as part of temporary teething troubles and traders expect a surge in supply to push prices lower by the second half of the year.

Ambatovy, a nickel and cobalt project operated by Toronto's Sherritt International began cobalt shipments late last year and expects to produce 5,600 tonnes of refined cobalt per annum, the company said on its website. This will make it one of the world's largest cobalt operations.

This project, along with the opening of Highland Pacific's Ramu nickel/cobalt operation in Papua New Guinea and a ramp-up in supply from Freeport-McMoRan Copper & Gold's Tenke Fungurume in the Democratic Republic of Congo is expected to keep cobalt prices weak in coming months.   Continued...