It is expected that China's cobalt prices will keep falling close to the break-even point in the face of persistent inventory pressure and low demand across the industry chain, Mysteel survey showed.
On the raw material side, the supply of intermediate raw material supplies in China have been relatively sufficient. According to customs data, China imported 52,451 tonnes of hydrometallurgy cobalt intermediate products in May 2024, a decrease of 0.36% month-on-month and an increase of 50.07% year-on-year. From January to May, the cumulative imports stood at 267,242 tonnes, up 78.87% year-on-year.
Additionally, the available inventory data and ongoing cobalt mining this year suggest that leading mining companies have maintained normal shipment, and the spot prices are close to the prices of long-term contracts.
Electrolytic Cobalt: The electrolytic cobalt prices dropped to around Yuan 195,000/tonne after a brief rebound subject to the sentiment front in the first half of June. Though the spot prices are currently with premiums over the benchmark prices, the bearish downstream cobalt salt prices have put a cap on electrolytic cobalt prices.
In addition, the European markets, typically active with stockpiling this time of year, have been quiet as some downstream players are wait-and-see following the rising exports in the first two quarters. Nevertheless, it is projected that China's electrolytic cobalt supply will rise in July, hence the prices are likely to hover low in the near term.
Cobalt Sulfate: With the power battery manufacturers focusing on destocking, the production of ternary precursors and the prices of cobalt salts in China are expected to continue to decline. At present, the cobalt sulfate prices have dropped to around Yuan 30,000/tonne, while leading downstream buyers' bids were around Yuan 29,000/tonne, a price the sellers have not yet accepted.
Additionally, the inventory held by the market players also signals a fall in cobalt sulfate prices, and some even believe that the prices will fall below the annual low in 2023.
Cobalt Chloride: The prices of cobalt chloride are on the downward track. On the one hand, leading companies have accumulated significant inventories, reducing bidding frequencies amidst cautious market sentiment. On the other hand, most smelters have reduced their willingness to offer at lower prices and stood on the sidelines. It is expected that the transaction prices will drop further despite the sellers and buyers in tug-of-war.
In conclusion, the current supply of cobalt products has not decreased, but the declining demand has led to a decrease in transactions. At the same time, a small number of enterprises are selling at lower prices due to inventory pressure, reflecting a downward trend in expected prices.
Written by Cora Ji, jiruyan@mysteel.com
Edited by Aggie Hu, huchenying@mysteel.com
