#Cobalt: Buy the dip, says Citibank. Tight market to continue as demand surges (#Batteries, #EV’s) and supply fears (#DRC) persist. Substitution at least 2 years away

Good short note from Citi on Cobalt. 

Bottom line, current retracement is a buying opportunity. Tight market to continue as demand surges (Batteries, EV's) and supply fears (DRC) persist. Substitution is still at least two years away. 

Cobalt prices are set to rise by a further 20% over the next 2 years on the back of a sustained deficit market and anticipated stock building on the back of high levels of supply risk. 

- The recent retracement in cobalt prices from 95,000/t to $89,000/t is a buying opportunity in our view. We see prices rising to average $100,000/t by 4Q18, and increasing further over time, to average $110,000/t by 2020. We could see prices reach these levels earlier than expected should downside supply risks at Katanga and Mutanda, which together are expected to produce 35,500t (59,300/t) or 27% (39%) of global supply during 2018 (2019) materialise.

 Even without DRC supply risks materialising we believe that cobalt is likely to remain scarce, with stockpiling set to continue, tightening the market more than would otherwise be the case. 

 Substitution away from cobalt is an issue but is unlikely to be a game changer until 2020