Ok couldn't help it. I took a pen, ruler and scanner to that chart. and make some comments observations on the Co market See below.
I don't actually know what caused the last Cobalt spike up in 2007, I'm imagining it was the Phone and laptop story? does anyone else here know?. But if so their usage is tiny compared to the EV/green power storage Tsunami of demand hopefully about to break upon us.
what is interesting is the identical head and shoulders pattern to the Rallies. Also the fact that we now seem to have hit long term support and if it continues to copycat we should see a rally back to the 25per Lb region over the coming year (55$ a ton) that should let this stock bounce up towards 15 cents again (especially with 200,000 plus tons on the upgraded Jorc -I hope)
My thoughts on the fundamentals of the cobalt price just now.
1. The reason the market (that's the spot market) spikes and collapses so quickly is that with so few tons around at any given time, when there is an expectation of a rally any small amount of forward buying or stockpiling by buyers, traders or speculative buying by hoarders forces up the price rapidly - which then turns into a self-fulfilling prophecy as everyone else rushes into the market to buy ahead their forward needs. This all happens from a period of less supply, Also explores get funded and off they go to find more (See CLA and 40 others crap ones this time)
2. Then the price shoots up 3-400% and vast profits are suddenly available to the producers. .Metallurgies in the nickel and copper mines get changed to make more cobalt and less Cu and Ni. new mines open up (see Katanga (Kamoto) and the Eurasia resources Kolwesi tailings dump processing this time around. Also all the local DRC artisanal miners who won't work for 3$ a day in crap conditions- suddenly can make 15-20$ a day and all pile back in with shovel and picks en mass and dig and sell.- so supply (comparative supply) can balloon out quickly - as demand doesn't jump so quick as the price - just a gradual 15-20% a year rise- in comes the rapid oversupply of the extra tons per month and down goes the price.
3. This oversupply is again compounded by the traders/buyers and speculators also suddenly rushing to offload their positions and stock and boom down goes the price fast and furious. Explorers get crucified and new investment runs away.
4. On the real supply side, the DRC artisanal boys now get 3$ a day again and so they pack up and go back to their farms or stealing mobile phones where they can get 2-3 $ a day without risking their lives and working like slaves. Other big mines switch their metallurgy back to get more Cu and Nickel, and others shut down or mothball (see now as possibly happening with Kamoto and possibly even Mutanda and two others in DRC). people do not want to invest - everyone is bearish. and people like Jimbo take over the chat lines triumphantly.
5. Note: IMO this process was also compounded this time by the Chinese government cutting back credits to battery producers and cobalt processors and changing subsidies to cut demand to also lower the Cobalt price to fend off the prospect of investment in new technologies which could undermine their long term dominant global position in Lithium Ion Bat technologies.
WE ARE HERE NOW IMO.
6. real Industry demand keeps growing, warehouse stocks dimish. shortages appear. prices tighetn up a bit - people get bullish again and .....repeat-off we go again to the races (and we don't hear from the jimbo's for 3 more years)
7. So what causes the base price??. IMO its that as long as Copper and nickel are mined cobalt keeps appearing anyway so supply is always there and as its usually a by-product and an extra credit to Cu or Ni it can be sold out at almost any price. So what creates the base price long term is mainly the level of real industry demand. and As we know (hope) demand is fundamentally increasing long term and hopefully about to increase geometrically over next few years with EV adoptions so the base price should also gradually be increasing. Therefore at current prices on the long term chart - and with the increasing demand -in theory, we are already pretty much undervalued long term and just waiting for the flip till No 6 (see above) happens again.
Anyway theres my thoughts on the market.
CLA Price at posting:
5.4¢ Sentiment: Buy Disclosure: Held
I don't actually know what caused the last Cobalt spike up in 2007, I'm imagining it was the Phone and laptop story? does anyone else here know?. But if so their usage is tiny compared to the EV/green power storage Tsunami of demand hopefully about to break upon us.
(20min delay)
