Cobalt Prices Continue To Fall, The Future Trend Will Be How?

Despite the growing popularity of the new energy market, upstream raw material prices have cooled significantly.

In the second quarter, due to the impact of the epidemic and other factors, the production and sales of terminal products such as new energy vehicles and 3C electronics were limited, and the prices of many commodities, including lithium hexafluorophosphate, cobalt sulfate, nickel sulfate and manganese sulfate, fell. Weak demand under the disturbance, cobalt commodity prices in July continued to be weak.

Cobalt prices extended declines

Cobalt prices fell in 2022 due to tepid demand. The INTERNATIONAL COBALT PRICE HAS FLUCTUATED FROM $40 / lb in mid-MAY to about $32 / lb recently, and the domestic electric cobalt price has also dropped to about 400,000 yuan/ton.

Cobalt sulphate prices averaged just 66,000 yuan a tonne in July, down almost half from 119,000 in March and 45 per cent from the previous month, according to SMM.

根据业务部门数据监测hows, cobalt prices fell in July shock. As of July 31, the cobalt price was 332,700 yuan/ton, down 11.59 percent from the price of 376,300 yuan/ton on July 1 at the beginning of the month.

Data released by Shanghai Steel Union on August 3 showed that the domestic cobalt price continued to decline, the price of cobalt sulfate fell 0.05 million yuan/ton, to 56,500 yuan/ton, cobalt carbonate, cobalt chloride and other cobalt salt prices maintained a decline.

Weak demand weighed on the market

"Electrolytic cobalt market in the near future weak operation. Traders quote closely following the weakening disk, demand and cost pressure under the spread of pessimism, shipping pressure is increasing, the market has a price correction operation, the price continues to bottom, and some low price source news, quotation slightly confused. The market off-season, superposition negative pressure, real single transaction volume is insufficient." As for the recent trend of cobalt products market, Zhao Chao, cobalt analyst at Shanghai Steel Alliance New Energy Division, said the international cobalt price remains weak, the industry lacks confidence in the future market, and the downstream intends to replenish on bargains, while the existing low price talks and deal rumors have forced the market price to move downward.

Under the background of this price, the downstream more in no hurry to cover orders, the spot market trading significantly weakened, some smelters to take a steady operation to cope with the downturn in the market.

Bai Jiaxin, a business analyst, believes that the production and sales data of new energy vehicles can be seen that the sales of new energy vehicles rose sharply, but the recovery speed is far less than expected, and affected by the epidemic, the inventory data of enterprises reduced, exacerbating the lack of cobalt demand concerns.

According to the latest data from the Customs website, the total amount of cobalt raw material imported by China in June 2022 was 7,000 tons of metal tons, down 1% month-on-month and 9% year-on-year. From January to June 2022, China imported a total of 45,800 tons of cobalt raw materials. Cobalt market supply is reduced, cobalt price has a certain rise support. But the overseas price continues to fall, affecting the domestic cobalt market sentiment, manufacturers wait-and-see sentiment is heavy, domestic cobalt price fell.

Smartphone sales in China hit a new low in the second quarter of 2022, less than half their all-time peak in the fourth quarter of 2016, according to the China Academy of Information and Communication Technology. Mobile phone market consumption is weak, cobalt market demand decline.

SMM also analyzed that cobalt price fell mainly due to weak demand in the terminal market in the second quarter, more dewarehousing of power batteries, continuous reduction in the superimposed digital market, a significant reduction in the demand for cobalt in the ternary precursor and four-cobalt market, and a significant decline in the price of cobalt.

Cobalt products may continue to be weak

Demand side pressure, short-term cobalt price trend is not optimistic.

Zhao Chao believes that in terms of cobalt electrolysis, the supply of cobalt raw materials in South Africa, which was interrupted by heavy rains, has been restored. Some domestic manufacturers have reduced cobalt salt production, resumed production and increased electric cobalt, and the expected supply of electric cobalt has increased. The current demand is still weak, cobalt alloy and magnetic material enterprises inventory cycle shortened, enterprises inventory reduction; Cobalt intermediate prices down to lead the mood, the market confidence is insufficient, is expected to have a short - term downward space. In terms of cobalt powder, although the decline of cobalt powder has slowed down, downstream demand has not recovered, the price of cobalt carbonate has fallen, and the cost of raw materials is not enough to support, so it is expected that there is still room for short-term decline.

Bai Jiaxin also thinks, cobalt raw material import volume drops, cobalt market supply drops; Recently, the price and profit of metal cobalt are higher than cobalt salt, and the flexibility of electric cobalt trading and the characteristics of easy storage, some intermediate cobalt salt plants reduce the production of cobalt salt, increase the production of electric cobalt, and the shortage of electric cobalt supply has been alleviated.

On the demand side, the demand for new energy vehicles, mobile phones and other products is less than expected, and the reduction of enterprises' inventory aggravates the lack of demand concerns. The overall cobalt market supply and demand double weak, the future market cobalt price downward pressure still exists, the short-term cobalt price downward trend is difficult to change.

The recent research report of CITIC Futures also believes that the demand for cobalt in the new-energy vehicle market has increased, but the sales of mobile phones are less than expected, leading to a lack of market confidence, and the short-term cobalt price may still remain low.