Cobalt market makes structural adjustments amid weak demand & price pressure

I. Background

Cobalt Price Trend Review (May 2024 - May 2025)

Over the past year, the cobalt market has experienced three distinct phases. Cobalt prices gradually declined due to weaker downstream demand and oversupply, maintaining a steady downward trend during May 2024 to late February 2025. And then, prices surged rapidly following the Democratic Republic of Congo (DRC)'s export restrictions, which disrupted supply chains and triggered speculative buying during late February to Mid-March 2025.  From Mid-March to Present, prices plateaued as downstream industries still held sufficient raw material inventories, and domestic stocks required further digestion. At the same time, end-users showed limited acceptance of current price levels, leading to a more rational market sentiment.

As of May 23, European standard-grade cobalt was reported at $15.2-$16.25/lb and cobalt hydroxide (min 30% Co.) was quoted at $11.2-12.5/lb CIF China, seeing a 0.2% month-on-month decline, reflecting subdued trading activity.

II. The Price Trend of Cobalt Sulfate

Persistently high feedstock costs continued to pressure smelters, making production barely profitable or even loss-making at current price levels in May. Thus smelters remained cautious in purchasing, mainly conducting just-in-time procurement for essential needs rather than stockpiling. In detail, the transaction price for Intermediate-based cobalt sulfate was hovering around Yuan 47,000-48,000/t. And that for recycled materials and MHP-based cobalt sulfate was at Yuan 45,000-47,000/t. Some old inventory even can be sold at Yuan 43,000-45,000/t.

Source: Mysteel

III. Structural Adjustment of Domestic Cobalt Industry

The cobalt value chain has undergone structural realignment, with cobalt salts and electrolytic cobalt experiencing a role reversal-Co3O4 has now emerged as the highest value-added cobalt products.

During price upswings, cobalt sulfate and cobalt chloride prices maintained strong correlation with their spread remaining within reasonable bounds. However, as the market fluctuated in a small range, their price differential began widening persistently. This divergence stems fundamentally from structural demand differences from downstream users. The demand for LCO sector was firm while that for ternary precursor segment was sluggish, which drove the spread expansion.

From a profit transmission perspective, Co3O4's current premium primarily benefits from stable order support in the LCO market, whereas electrolytic cobalt has become a value depression due to weak demand in traditional alloy applications. This pronounced profit gradient is triggering capacity reallocation across the value chain, with some low value-added producers already adjusting production lines and pursuing strategic pivots toward higher-margin products through technological upgrades - all aimed at securing competitive advantages in this dynamically evolving market landscape.

Source: Mysteel

According to Mysteel market research, the operating rate in May remained below 50%, with some small and medium-sized cobalt metal producers suspending operations. The combination of negative profit margins for cobalt metal and current raw material shortages has made production cuts an inevitable trend. As of May 23, the MB price converted to RMB stood at Yuan 281,739/t, while the average price difference between domestic and international markets reached Yuan 44,739/t, representing a widening gap compared to April. This disparity has led to outflows of some cobalt metal supplies to overseas markets.

Source: Mysteel

IV. Conclusion

The current market adjustments reflect the cobalt industry chain's acute responsiveness to changes in end-user demand. The DRC's export restrictions have exacerbated shortages of cobalt intermediates, while high raw material costs coupled with weak downstream demand may continue to squeeze smelters' profit margins. The persistent sluggish demand may further soften cobalt intermediates price, intensifying competition across the supply chain.

In addition, small and medium-sized enterprises (SMEs) focused on destocking, with technologically backward or financially vulnerable players gradually exiting the market amid prolonged losses. While top-tier ones are likely to consolidate resources and improve smelting efficiency to solidify their market positions.