Fri Mar 23, 2007
Metal-Pages

  LONDON (Metal-Pages) 23-Mar-07. The cobalt market has been fairly quiet this week, with values unchanged at around $30-31.50/lb for 99.8% and $29.50-30.50 for Russian material. However, there is clear agitation below the surface as opposing sides position themselves for further movement. Although there are a number of relatively neutral observers, including producers who are happy to see higher prices, but are clearly not forcing the issue, bullish sections of the trade and more bearish elements of the consumer ranks, are poles apart.

Despite largely agreeing with the range above, consumer sources told Metal-Pages today that they are concerned about manipulation and believe the market is not as undersupplied as others would lead us to believe. "We have metal to spare," they told M-P, "And we have tried to sell it back to suppliers and the trade, but are not getting the published numbers. In fact we've lost business. We also know that the recent special steel mill tender went below $28. It is true that this company can accept 99.2% material, but it is also true that it won't accept today's highest prices."

A major European trade source, meanwhile, admitted that the outward appearance of the market is quiet but "in reality fundamentals, such as developments in the DRC are being left alone to get to work".

He drew attention to a report on the African news service Mining Weekly Online that a permanent ban had been imposed on all raw ore leaving the mining-rich Katanga province of the Democratic Republic of Congo. (DRC).

The newly elected Katanga governor Moise Katumbi told the site this week that a grace period of six months was being given to those exporting laboratory-certified concentrate from Katanga. Thereafter a ban would also be imposed on the export of concentrate and only refined metal would be allowed to leave the province.

He had already put a stop to all raw ore leaving and that would continue for as long as he was governor.

"I am not going to allow it. They have to make the metal here," he reiterated. "I'm not refusing metal exports, it's just the raw ore that is being stopped," he said.

Laboratory-certified concentrate would still be allowed out for a period of six months, but from October that would also be stopped.

Gecamines had a refinery, which was in bad shape, and required a $60-million investment to restore.

By October, the new arrangement of miners with Gecamines had to be concluded, he told Mining Weekly Online.

During the six-month period, the plant of the State-owned Gecamines would need to be rehabilitated to allow raw ore to be processed in the DRC itself.

Attention has also been drawn to the booming superalloy sector and also a projected 4,500-5,000 tonne shortfall due to reduced supply and good demand reckoned to be at 65,000 tpy now.

Both sides obviously have their reasons for wanting to either fan the flames or douse the fire, and can call upon relevant behind the scenes factors to strengthen their arguments. However, on the surface and on the websites little action has taken this week, with BHP-Billiton still quoting at $32.50, having made its last sale on 14 March -- a 5 tonne lot to Europe at $32/lb.

The Norilsk Nickel has also been quiet this week, with the offer price standing at $30/lb since 16 March. Last week the site turned over a respectable 21 tonnes at an average price of $29.28/lb. Although no actual tonnages have been divulged, it would seem that little business has been transacted this week, particularly in Europe.

Quiet times, but for how much longer?