Hedge funds including Anchorage Capital Advisors and Squarepoint Capital have been building positions in cobalt by buying up physical material, as tumbling spot prices and a more liquid futures market create new trading opportunities in the battery metal.

Cobalt is a relatively tiny and specialized market compared with commodities like copper or oil, and prices have dropped to the lowest in more than seven years as the market is flooded with production from the Democratic Republic of Congo and Indonesia.