The impact of COVID-19 pandemic can be felt across the chemical industry. The growing inability in the production and manufacturing processes, in the light of the self-quarantined workforce has caused a major disruption in the supply chain across the sector. Restrictions encouraged by this pandemic are obstructing the production of essentials such as life-saving drugs.
The nature of operation in chemical plants that cannot be easily stopped and started, makes the operational restrictions in these plants a serious concern for the industry leaders. Restricted and delayed shipments from China have created a price hike in the raw materials, affecting the core of the chemicals industry.
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The slacking demand from different impacted industries such as automotive is negatively influencing the growth of the chemical industry. In light of the current crisis, the market leaders are focused to become self-reliant which is expected to benefit the economic growth of different economies in the longer term. Companies are triggering events to restructure and recover from the losses incurred during the COVID-19 pandemic.
Persistence Market Research (PMR) has published a new research report on the cobalt sulfate market titled “Cobalt Sulfate Market: Global Industry Analysis 2012-2016 and Forecast 2017-2025.” The report states that the growing shift from the cobalt-rich NMC111 to the NMC811 cathode configuration is moderately driven by the higher energy density of the 811 and another core concern is the limited cobalt supply. According to the USGS, around 123 KT of cobalt was mined in 2016 and it was projected that there will be insufficient supply to meet the required demands in 2017. Currently, over one-fourth of the cobalt use is in several chemical applications, including material used for EV batteries. Its use is expected to grow rapidly, with demand likely outstripping supply. Henceforth, this is expected to result in a rapid increase in price. Supply constraints are likely to persist in the coming years as approximately 60% of cobalt production comes from the Democratic Republic of Congo, which presents both operational as well as reputational risk for mining companies. Furthermore, it is mostly produced as a by-product of copper and nickel.
In order to address these issues, companies operating in the market are pulling up their socks and are developing advanced products in order to balance the consumption of cobalt. For instance, in January 2017, Umicore acquired the Nickel Manganese Cobalt (NMC) battery material patents from 3M. The NMC cathode materials covered by the different patent families offer an exceptional balance of energy, power, safety features, and low cost. Companies are also getting into partnerships with leading firms in order to acquire their technology, such as in November 2017, Umicore and Voxdale announced a partnership with Mahindra Racing in the Formula E Championship. With the help of this agreement, Umicore and Mahindra Racing showed that top electric car performance can be achieved using recycled materials for battery storage.
According to the report, the global cobalt sulfate market is expected to exhibit a CAGR of 8.0% from 2017 to 2025. The market was worth US$ 2,745.9 Mn in 2017 and is expected to reach a valuation of US$ 9,523.5 Mn by the end of 2025.
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Government Subsidies and Initiatives to Accelerate Sales
Several governments worldwide are focusing on the development of incentives and subsidies to promote the sales of electric vehicles as well as batteries, which is likely to push the demand for cobalt sulfate in the coming years. Governments of various economies in Europe are offering attractive incentives to customers who choose to purchase electric vehicles over conventional IC engine vehicles. This has promoted an increase in sales of electric powered vehicles, especially in Switzerland, Norway, etc. Further, consumers are exempted from vehicle fees, such as purchase taxes and VAT, which sometimes make up for 25% of the total cost. Electric vehicle batteries are gaining traction in the global market and with it, the demand for cobalt sulfate is growing. Moreover, in the last couple of years, chemical applications have accounted for a significant share in total cobalt demand across the globe. Likewise, the demand for cobalt is expected to be driven by increasing production of lithium ion batteries for electric storage systems and electric vehicles.
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