Cobalt hits highest for 14 months on new year demand surge
London, 08 January 2010 - Cobalt prices climbed to their highest levels since November 2008 in Europe on Friday, with the first full week of 2010 witnessing an upsurge in demand from end-users, traders said.

High-grade 99.8 percent metal was quoted at $22.00/23.00 per pound, while 99.3 percent Russian metal stood at $21.00/22.00, both up some $2.00 from prevailing levels at the turn of the year.

"There does seem to be an upturn in enquiries at the moment," one trader said.

End-users had flocked back to a market that is perennially tight of metal, others said, with many producers unable to offer metal until early in the second quarter. China's Jinchuan has also upped its offer price to $25.50 per pound to $23.50.

"This market is tighter than salt supplies in West Berkshire... we are looking at a price of $25 next week," another trader said.

The move was also exacerbated by some speculative interest ahead of next month's futures contract debut on the LME.

The LME will introduce its cobalt futures contract on February 22, just less than two months away. So far, the LME has approved brands from Vale Inco, Votorantim Metais Niquel, Sumitomo Metal Mining and Jinchuan Group for delivery against the contract.

Prices are likely to advance further after the LME contract launch, traders said, because very little stock available will be available to be warranted in warehouses, resulting in the potential for technical tightness.

"If you look at nickel, there are over 150,000 tonnes of stock, which would cost around $6.5 bullion to buy," the second trader said. "In cobalt, there won't be much more than 1,000 tonnes, which can be bought for $44 million - there are plenty of firms who could snap that up if they wanted to."

(Editing by Mark Shaw)