Why the Run-Up in Cobalt Demand?

A battery pack utilizing 2 kilograms of lithium will require 8.4 kilograms of cobalt or 18.5 pounds; this is six times as much as the current nickel metal hydride batteries.

Published: 28-Dec-2007

DETROIT -- The following price charts from the excellent new Internet minor metals information center http://www.minormetals.com, published by TheBullionDesk.com, clearly show the roller coaster ride that cobalt has been on during the last six months in particular, and the last two years in general. In the earlier period cobalt first doubled and then plateaued. Now in the last six months of 2007 cobalt prices have gone up another 50% above the base established during the plateau period The total increase in price of cobalt over the last two years has, as of now, been 300%; thus cobalt has been a far better investment during the last two years than either gold or platinum.

Is the current cobalt price run-up a “bubble”, or the froth around a bubble, or is it a solid movement in demand that is running ahead of supply? There are just two reasons why the price of a natural resource goes up:

The real (actual) demand exceeds the supply, or;
Speculative demand exceeds supply.

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