| |
Cobalt's Future Driving Ahead with Hybrid Cars
|
|
|
High gas prices are moving the number hybrid cars sold into overdrive. And that is helping cobalt prices stay higher longer than anyone thought.
Look at this recent news headline from the Chicago Tribune:
"Battery-powered car race is on: Despite current cost and safety concerns, automakers see plug-ins and hybrids as remedy to future $5-a-gallon gasoline”
The article quoted a Ford Motors release, stating that it expects U.S. hybrid sales to reach 500,000 units this year, about 3 percent of the market, and to triple to 10 percent in a few years if gas reaches $5 a gallon and stays there.
Cobalt is a key ingredient in hybrid car batteries – and one of the reasons the price for cobalt has jumped from $25 to $50 per pound this year. There are anywhere from 5 to 18 pounds of cobalt in every hybrid car battery.
That’s a lot of new annual demand for cobalt. If the market did triple to 1.5 million units, even at 10 pounds cobalt per car, that makes 15 million new pounds of cobalt needed annually – a huge increase in a small 60,000 ton per year (120 million lbs) market.
Toyota just announced they sold their one-millionth hybrid, and are looking to sell one million per year over the next decade. They can’t keep them on the dealer lots. The following excerpt comes from a June 2008 story at www.hybridcars.com:
"A year ago, our [vehicle] supplies were at record levels in Prius," Bob Carter, head of Toyota’s U.S. operations told the trade journal Automotive News. "Now we're in catch-up mode." Toyota can’t ramp up battery production fast enough to build enough Prius vehicles to meet demand, Carter said. Waiting lists for Prius are growing to six months and longer. "We're pushing for every bit of production we can get," Carter said. "We're working very closely with our suppliers to increase that capacity."
The burgeoning hybrid industry is going to create a supply/demand impact in an already tight cobalt market. SFP Research out of the UK forecasts growth in cobalt demand for hybrid vehicles from well under 1000 tons (2 million lbs) in 2005 to over 9000 tons (18 million pounds) by 2015.
“Cobalt production has tripled in the last 12 years from 20,000mt per annum in 1995 to nearly 60,000mt per annum in 2007. Production will have to increase by another 25% just to keep in equilibrium with the above forecast hybrid demand and the natural growth in existing uses” concluded an article in Resource Investor.
Because cobalt holds an electric charge better than almost any other metal, it is hard to replace – even at $50 per pound. And the current electric batteries work so well – being re-charged as they drive – there is little incentive to change their structure (and other metal prices have skyrocketed as well as cobalt – nothing is cheap anymore).
Many of the consumer electronics we use today are also powered by cobalt-laced batteries. That market has leaped exponentially in the last decade with the proliferation of things like cell phones and iPods – also creating competition for the automakers on the cobalt demand side.
The cobalt price is now roughly $45/lb, depending on where in the world you buy it. Looking back on 2006 and 2007 research reports from major brokerage firms in Europe and North America – none had forecast the $50 cobalt prices we saw earlier this year.
With +$4 gas, hybrid car demand is likely to continue to drive cobalt prices higher.
Your Source for High-Potential Early-Stage Growth Stocks Since 1995
Richard Reinhard
****
DISCLAIMER: The information found in this profile is protected by copyright laws and may not be copied, or reproduced in any way without the expressed, written consent of the editors of Growth Stocks Weekly. Growth Stocks Weekly is an independent electronic publication committed to providing our subscribers with factual information on selected publicly traded companies, business, and economics. All companies are chosen on the basis of certain financial analysis, and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible with the added aid of technical analysis. Growth Stocks Weekly and its editors do not accept compensation from public companies featured in this publication. All statements and expressions are the sole opinions of the editors and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein. The staff of Growth Stocks Weekly are not registered investment advisors and do not purport to offer personalized investment related advice. The publisher, staff, or anyone associated with, or associated to, the Growth Stocks Weekly may own securities mentioned in this newsletter and may buy or sell securities without notice. The profiles, critiques, and other editorial content of the Growth Stocks Weekly may contain forward-looking statements relating to the expected capabilities of the companies mentioned herein. The reader should verify all claims and do their own due diligence before investing in any securities mentioned. Investing in securities is speculative and carries a high degree of risk. We encourage our readers to invest carefully and read the investor information available at the web sites of the Securities and Exchange Commission ("SEC") at http://www.sec.gov and/or the National Association of Securities Dealers ("NASD") at http://www.nasd.com. We also strongly recommend that you read the SEC advisory to investors concerning Internet Stock Fraud, which can be found at http://www.sec.gov/consumer/cyberfr.htm. Readers can review all public filings by companies at the SEC's EDGAR page in the US and SEDAR’s electronic filing of securities information as required by the securities regulatory agencies in Canada at www.sedar.com. The NASD has published information on how to invest carefully at its web site.
Copyright © 1995-2008 by Diversified Financial Solutions, Inc. All Rights Reserved
|
