China Cobalt Market: Tug-of-War Between Weak Demand and Strong Cost Support (Q1-Q2 2026)

From the first quarter of 2026 to the present, the domestic cobalt market in China has generally exhibited a operating trend characterized by weak demand, softening prices, high costs, and compressed profit margins. Driven by factors such as sluggish downstream 3C consumer electronics, reduced demand for ternary cathode materials, and front-loading of procurement by enterprises, cobalt salts and Co3O4 prices have fluctuated downward. On the supply side, raw material prices remained stable but transactions were sluggish. The smelting sector faced high costs, placing the industry in a competitive landscape characterized by weak demand and supply, with costs providing strong support.

After the Chinese New Year, the production process for cobalt sulfate shifted to primarily using recycled materials, supplemented by MHP. Transaction volumes have dropped sharply, with significantly fewer new orders from downstream customers. Market offers were in the range of Yuan 93,000–95,000/tonne, while actual transaction prices moved down to Yuan 91,000–94,000/tonne. Sulfur prices have been rising steadily this year, further pressuring cobalt sulfate production costs, leading to firm offers from cobalt sulfate producers. Demand for cobalt sulfate from ternary precursor producers has been front-loaded. Procurement prices for cobalt sulfate in Q2 are largely stable at around Yuan 91,000/tonne, but overall purchase volumes are relatively low. While demand is expected to pick up modestly in the latter part of Q2, it will mainly be for small replenishment purposes, with no large-scale procurement intentions. In the middle to late Q2, ternary demand is expected to recover partially. Coupled with stable demand for cobalt sulfate from other downstream sectors, transaction prices are higher than those paid by ternary producers. Cobalt sulfate prices are expected to rebound by the end of Q2, with a "more likely to rise than fall" outlook thereafter.

As for the cobalt chloride market, persistently high prices of cobalt intermediates have pushed up costs. On the demand side, reduced production schedules for Co3O4 and the switch by some enterprises to lower-priced, low-nickel cobalt sulfate have led to weak orders. Prices firmed after an initial rise, then stabilized and showed a slight downward trend, with thin transactions. In Q2, weak demand is expected to cap price increases, while production costs remain under pressure. Cobalt chloride prices are expected to remain stable in Q2.

Co3O4 prices have weakened slightly due to reduced production schedules for lithium cobalt oxide (LCO) and poor shipments, with the price range of Yuan 360,000–375,000/tonne. Downstream purchases remained on a just-in-time basis. Orders for 3C products continue to decline. Domestic mobile phone shipments have fallen for four consecutive months since October 2025. Battery manufacturers forward-loaded their demand for LCO in Q4 of last year, leading to significantly weaker demand in Q1 2026. Combined with inventory build-ups, production schedules and new orders for LCO have been relatively sluggish. However, according to Mysteel, end-users are indicating inquiries and potential purchasing intentions in May. That said, given the significant volatility in lithium carbonate prices, end-users remain cautious. Looking ahead to Q2, cost support is expected to limit downside for LCO prices, while weak demand will cap upside. Co3O4 market offers are expected to remain stable in the range of Yuan 400,000–410,000/tonne.

Overall, downstream end-markets in Q1 and Q2 of 2026 exhibit the following characteristics, "weak consumer electronics, subdued power batteries, mostly just-in-time demand, and cautious inventory building." Market players primarily focused on destocking and market sentiment was muted amid insufficient new orders.

As of the end of April, over 90% of the quota allocated for Q4 2025 had been customs-cleared in terms of imports. In terms of arrival schedules, a large concentration of vessels is expected to arrive in June. Based on current observations of terminal berth and container berthing conditions, no bulk arrivals are expected in the short term. Downstream end-users are exerting downward price pressure, which is being transmitted upstream. However, cobalt intermediates continue to have strong pricing support. For the cobalt market during April–May, April was characterized by weak consolidation, with cost support providing a firm floor. The cobalt market is expected to continue its trend of high-level, weak consolidation in May, with limited room for significant price increases or decreases.

Edited by Cassie Li, lixiangying@mysteel.com