Monday, 28 July 2008
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MINORS FOCUS
Cobalt price slide continues, hits new 8-mth lows under pressure from aggressive offers

By Martin Hayes - Chief Correspondent, martin@minormetals.com (+44 (0)20 7929 6339)

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London, 28 July 2008 - Cobalt prices continued to fall sharply in Europe on Monday, with the start of the week seeing no respite from current weakness as the market sagged to fresh eight-month lows.

"It is all down to the offers coming out of China - they have been getting cheap concentrates from the Congo and the offers are very aggressive," a trader said.

The 99.8-percent freemarket price fell around $1.00 a pound from its Friday level to stand at $35.00/36.00, while a similar fall was seen for 99.3 percent metal, which is now at $32.00/33.00.

Chinese 99.80 percent cobalt from Jinchuan was being offered at some $32.00 a pound, with some traders reporting offers near the $30.00 level, which suggests that the market has further to fall.

"There has been a slowdown in the summer, and when you couple that with the Chinese situation you can see it trading at $30.00 soon," the trader said.

Traders said that the fall in the concentrates price meant that Chinese producers were able to significantly lower their refined metal prices without eating into margins. Since the cobalt market peaked, the refined price is down around 34 percent, but cobalt concentrates are nearly 50 percent softer -- around $20 a pound.

Meanwhile producer BHP Billiton is offering 10 tonnes of July 99.80 percent cobalt to $38.50 a pound, having last sold metal at $42.00 on July 10.

Russia's Norilsk Nickel's indicative price for 99.30 percent metal, posted today, is $35.50. However, last week it traded at an average price of $33.65.

In recent months the impetus that saw prices above $50 a pound and at 30-year highs has faded -- the market stalled just under the all-time peak of $53.25 set in 1978. But the last quarter of the year may see higher prices again, as offtake picks up and end-users start looking for early-2009 requirements, traders said.
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