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A beginner’s guide to cobalt: Price, uses & market overview
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On this page, we explore everything you need to know about cobalt. Gain insights into cobalt market trends, pricing mechanisms, and the environmental impact of cobalt.
Read on to learn more about this popular commodity and find links to beginner friendly guides explaining how you can get involved in cobalt.
What is cobalt?
Copy link to sectionCobalt is a vital commodity in today’s world. First discovered by Swedish chemist, Georg Brandt in 1735, the metal with a strong magnetic attraction plays a central role in the production of lithium-ion batteries.
Its unique properties and diverse applications make it a critical commodity, especially in the electric vehicles industry. Beyond EVs, cobalt is used for a range of industries including the manufacture of jet engines, gas turbines, electric motors, and even MRI machines.
With electric vehicles and renewable energy expected to keep cobalt prices high, its future is under some scrutiny, particularly surrounding mining practices in the Democratic Republic of Congo. More sustainable alternatives are also being investigated, which could hamper cobalt’s prospects.
Cobalt market overview
Copy link to sectionThe main market where Cobalt is traded is the London Metals Exchange (LME) where it is possible to trade futures contracts. However, cobalt prices are typically derived from physical contract negotiations between miners, refiners, and major consumers.
Cobalt prices have remained relatively stable bar two periods of volatility. Between 2016 – 2018, the price of cobalt surged almost 300%, although by late 2019, its price was back at its lows. 2021 – 2022 saw another spike higher, this time approximately 175% and again, it was short-lived falling back to its lows in 2023.
Is cobalt valuable?
Copy link to sectionYes, cobalt is a valuable commodity and there are numerous reasons why investors are attracted to the market. We have highlighted some of these key fundamentals below, explaining what they are and why they matter.
- Bet on demand. From airbags to paint, its versatility has resulted in its widespread use in many applications. However, almost half of the world’s cobalt is used in batteries. As the world becomes increasingly reliant on technological devices that all require batteries, cobalt demand will likely rise too.
- Hedge against inflation. All investors have to deal with the risk of inflation and one way to protect, or hedge against it, is by investing in commodities such as cobalt. Inflation is when money loses its value over time. Precious commodities tend to rise when inflation rates rise, making them a good hedge against it.
- Electric vehicle market. As we’ve already mentioned, cobalt is key for batteries, more specifically lithium-ion batteries, the types used in electric vehicles. As the EV market grows in the coming years, demand for cobalt will increase too. The past few years have already seen cobalt rise as an important metal in the EV industry.
- Diversification. Many investors stick to stocks and bonds with little exposure to commodities. Including cobalt in a portfolio provides an easy way to diversify. When the stock or bond market is down, it’s common for the commodity market to be up. Investing in cobalt can protect a portfolio.
How to invest in cobalt
Copy link to sectionYou can invest in cobalt by using a commodity trading platform. These platforms offer a range of commodities and are very easy to use. There are different platforms suitable for specific requirements. For a more specialised approach, you can use the best cobalt trading brokers.
Some let you buy physical cobalt, others let you trade cobalt, and many are designed for investing in the grain. Visit our dedicated guide to discover how to invest in cobalt.
Cobalt in your investment portfolio
Copy link to sectionA diverse investment portfolio can help protect you during market uncertainty, and the inclusion of cobalt can add value while allowing you to spread your money across various markets.
Cobalt often moves independently to traditional investments like stocks and bonds. You can include cobalt in your portfolio as a hedge against potential losses. During times of economic uncertainty, investors view commodity metals such as cobalt as attractive options.
Cobalt vs other commodities
Copy link to sectionCobalt is part of the metals family of commodities, including gold, platinum, and palladium. Each commodity is unique in its own way and offers different features for investors and traders. You can learn more about specific metals using our dedicated guides below.
- Gold. Gold is the best known metal, used as a store of value, and an inflation hedge.
- Platinum. Platinum is more expensive than gold and used in many industries
- Silver. Silver is a less expensive precious metal that is a popular component in electronics.
