[SMM Analysis] Cobalt Chloride and Co3O4 Quotes Pulled Back Sharply

This week, quotes for cobalt chloride and Co3O4 in China fell markedly; however, the decline was not driven by a sudden deterioration in short-term supply-demand fundamentals.

For cobalt chloride, although quotes from some sellers had previously stayed high, they lacked effective liquidity support, leaving prices on a fragile footing. When buyers with just-in-time procurement needs made inquiries at prices below mainstream spot price levels, or even below the industry cost line, and as some sellers took a pessimistic view on the market outlook and weighed their own working capital needs, some enterprises lowered quotes, resulting in actual transactions below cost.

For Co3O4 pricing, during the previous three months of sustained price declines, to cushion the impact of a sharp drop in our quotes on market sentiment, we proactively adopted a "slow decline" strategy, using low-range quotes as a market reference. However, as the adjustment period extended, the cushioning effect of our quotes diminished at the margin, and the spread between actual transaction prices and quotes continued to widen. To more accurately reflect actual market transaction levels, this week we proactively abandoned the slow-decline pace and moved our quotes closer to a tradable range, a move that objectively amplified this week's price decline.

It should be emphasized that the current low prices for cobalt chloride and Co3O4 are more a reflection of choices made by some enterprises; quotes from mainstream top-tier producers remain relatively firm, and the market has not seen broad-based sharp price cuts.

Looking ahead, we believe that after this round of price adjustments, there is limited room for another sharp, deep decline in the short term. The market is expected to gradually enter a phase of bottoming out and consolidating at lows, with prices moving sideways in a narrow range on a subdued note. Co3O4's subsequent trend will remain closely anchored to the pace of cobalt chloride price fluctuations.