Jan 7 (Reuters) - Prices for cobalt metal in China powered to their highest in almost two years on Thursday, with traders attributing the rally to a new round of buying by the country’s state stockpiler.
Cobalt on the Wuxi Stainless Steel Electronic Trading Center - a reference for spot deals in China - hit 319.50 yuan ($49.42) per kg, the highest since Jan. 11, 2019. It is up more than 13% already in 2021.
On the London Metal Exchange, prices of cobalt metal, used to make alloys for jet turbine blades, are up nearly 10% since the start of 2021 at $35,500 a tonne, their highest level since November 2019.
The government in top cobalt consumer China was advised by state-backed research house Antaike to stockpile metals in the wake of a collapse in commodity prices last year after the coronavirus outbreak, but details of official cobalt purchasing plans have not been made public.
Two cobalt traders said stockpiling was a factor in the latest price spike, with one adding that COVID-19-driven logistical disruptions in South Africa were limiting supply.
Most of the world’s cobalt is mined in the Democratic Republic of Congo and reaches international markets via South African ports.
In November, Reuters reported that China’s National Food and Strategic Reserves Administration would buy 2,000 tonnes of cobalt in a first round of stockpiling and that a second round could follow.
CRU analyst George Heppel said on Twitter here the consultancy understood China's stockpiler had agreed to buy an additional 3,000 tonnes, taking the total up to 5,000 tonnes.
“Stockpiling will happen slowly over this year, so this growth in price is most likely being driven by trader optimism as opposed to fundamental tightness,” Heppel said in an email.
The reserves administration did not answer calls seeking comment outside normal business hours. A spokesman had previously said he was unaware of any cobalt stockpiling plans.
($1 = 6.4652 Chinese yuan renminbi)
Reporting by Tom Daly; editing by Pratima Desai and Susan Fenton
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