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Superalloys

Even though DR Congo is trying to review mining contracts, especially those with China, cobalt supply remains fragile. The market is changing: although it seems to have settled in September with the ongoing supply chain problems in the automotive industry, long-term contract discounts have evaporated in tight market conditions.

One cobalt broker is anticipating that the deficit will hit as early as 2024 and is forecasting price increases to previous peaks of over US$ 40 per lb. On the LME, the third quarter brought a cobalt cash average of US$ 51,522 per tonne, rising from US$ 51,555 in July to US$ 51,729 in August before edging back to US$ 51,280 in September.

Car manufacturers are ramping up production of electric vehicles and this should make for interesting times in the cobalt market.

Superalloys witnessed unexpected demand through the third quarter of 2021. Nickel prices climbed towards a seven-year high, reaching US$ 20,715 per tonne in early September; this followed a third quarter average of US$ 19,122 on the LME. Worries over supply contributed to the increase as inventories were lower, demand stronger than expected and supplies not keeping up. There has also been a shortage in nickel alloy scrap as lower production throughout the pandemic is now catching up with us, coupled with the use of superalloys in stainless steel supply when superalloy orders were scarce.

LME stocks are down over 35% since April and are continuing to drop. There has also been worry over Indonesia talking of applying an export tax to nickel products. Adding in the catastrophe of shipping costs, this makes for an interesting if not anxious time surrounding the supply of scrap and other raw materials.

As a metal linked to the electric vehicle boom, nickel seems to be in demand. That demand is only going to get stronger as the aerospace supply chain kicks into action.