China cobalt supply seen rising over 20 pct in 2008

NANJING, Nov 12 - Cobalt supply in China is expected to rise more than 20 percent to 18,093 tonnes this year, due to higher cobalt ore imports to meet expanded production capacity, an analyst from Antaike, a state-owned research firm said on Wednesday.

Yang Xiaofei said China's primary cobalt consumption was expected to stay flat, or rise only marginally to about 12,700 tonnes.

"The Chinese cobalt market shows signs of oversupply and there are about 1,900 tonnes of inventory in the cobalt market," Yang said.

The supply includes domestic production, as well as imported cobalt salt and powder.

Cobalt prices have been on a rollercoaster this year. Domestic spot prices surged to more than 800,000 yuan ($117,100) a tonne, or $53 per lb, in March, before plunging to below 400,000 yuan per tonne this week.

"The market is terrible. Demand is uncertain, the price trend is uncertain, policies are uncertain," said Shen Zhehao, manager of Jiangsu Xiongfeng Science & Technology Co.

Cobalt prices are expected to stay weak for the rest of the year and likely through next year, industry officials said.

"I don't think next year the market will improve much. A lot of people have moved to the sidelines, and they are pessimistic about the future," said Antaike's Yang.

China's $586 billion stimulus package was unlikely to have any immediate effect on the cobalt market, industry officials said.

"If the overall economic environment improves, it will of course benefit the cobalt market," Yang said. "But obviously there is going to be a delay in the effect of the stimulus plan." ($1=6.830 Yuan)