Glencore believes the cobalt market, although still in oversupply, is seeing recovery signs after cobalt hydroxide prices bottomed in Q2, Kallanish reports.

The giant mining and trading group said during its H1 2023 earnings call with analysts on Tuesday that metal price was down 59% in the period, significantly impacting its copper business. Cobalt and the intermediary product Glencore produces are by-products of its copper operations.

Chief financial officer Steven Kalmin said cobalt hydroxide pricing bottomed in Q2 but is up 10-15%. Noting the market remains in oversupply, he explains there’s a build-up of inventories, “but it is something that we expect to be largely a short- to medium-term impact with positive fundamentals for that business long term as well.”

The positive outlook is echoed by ceo Gary Nagle: “We’re off the lows, and cobalt pricing is even up a little bit in the last couple of months… EV use of cobalt is incredibly strong, and forecast remains very good for that. [Demand from] Aerospace and defence also [remains] very strong.”

The executives explained that with additional supply coming out of Indonesia, the world’s largest cobalt-producing company has had to take action. Kalmin confirmed Glencore stockpiled cobalt in H1 2023 as a supply-side response to weak market demands.

By building inventories and cutting supply to the market, the company was supporting a recovery in cobalt prices. It will also lower future production and is unlikely to ramp up cobalt output to 60,000 t next year as previously stated. Yet, the company is not ready to unveil further details.

In H1 2023, Glencore produced 21,700 t of cobalt, an on-year increase of 5%. Last year, its cobalt production reached 43,800 t. The guidance for 2023 stands at around 38,000 t.  

Realised cobalt metal prices declined 59% on-year in H1 2023, driving down Glencore’s hydroxide payabilities as low as 51% in May 2023.

The company, which does not disclose its cobalt realised prices, posted a 62% on-year decline in its H1 net profit at $4.56 billion (see related story).