[SMM Cobalt Morning Meeting Summary] Off-Season Weak Demand, Price Chain Continues; Market Under Pressure Still Searching for Bottom

Refined cobalt:

This week, refined cobalt futures continued to drift lower, with the spot price center moving further downward. On the supply side, mid-week, influenced by market expectations before the release of customs data, some funds traded in advance on the significant increase in China's cobalt intermediate products imports, causing a considerable pullback in futures. Although the final imports were lower than market forecasts and prices rebounded slightly, constrained by weak current demand, the rebound was very limited, and prices remained at low levels. After the rapid price decline, most smelters and traders suspended quotations, and the market was dominated by a wait-and-see sentiment. On the demand side, downstream enterprises were still in the summer break cycle, with weak purchase willingness, only maintaining small replenishment for essential needs, and the market transaction atmosphere was generally sluggish. In the short term, it is still the consumption off-season, with limited demand support. Coupled with weak market sentiment, prices may continue to consolidate at lows. Attention should be paid to changes in downstream restocking pace after the summer break.

Intermediate products:

This week, the cobalt intermediate products market remained in a stalemate, with prices lacking transaction guidance. July customs data showed that China's cobalt intermediate products imports stood at 16,100 mt in physical content (approximately 5,000 mt in metal content), slightly below market expectations but with limited impact on the current supply-demand pattern. Miners' indicative tender prices remained at $21-22/lb, while downstream psychological price levels had pulled back to $17-19/lb, with no narrowing of the price spread, and tenders continued to be unsuccessful. Some miners began adjusting strategies, considering suspending direct sales and instead turning to toll processing to produce refined cobalt for sale. In the short term, the tug-of-war between upstream and downstream persists, and price stabilization still awaits substantial transaction finalization.

Cobalt sulphate:

This week, the cobalt sulphate market remained in the doldrums, with cost support continuing to decline and the price disparity between buyers and sellers not narrowing. On the supply side, quotations remained divergent: primary smelters, constrained by high-cost raw material inventory from earlier periods, held quotations at 75,000-80,000 yuan/mt, but the recent MHP cobalt payables had pulled back to around 73% of the low-end price, bringing current production costs down to about 70,000 yuan/mt. Cost support weakened significantly, and some enterprises may consider offering concessions above 70,000 yuan/mt. On the recycling front, mainstream quotations were around 93-95% of the SMM low-end price, with some enterprises under financial constraints further reducing to 68,000-70,000 yuan/mt. Isolated low-quality cargo was heard around 65,000 yuan/mt. On the demand side, there was still no improvement. The indicative price from LCO precursor enterprises for low-nickel cobalt sulphate had dropped to 68,000-70,000 yuan/mt, and some ternary cathode precursor enterprises had pressed their indicative price for medium-to-high nickel cobalt sulphate to around 65,000 yuan/mt. However, the actual price spread between buyers and sellers remained wide, and transactions stayed limited. In the short term, the cobalt sulphate market is still in a bottom-seeking phase, and price stabilization awaits the release of concentrated downstream restocking demand.

Cobalt chloride:

This week, the cobalt chloride market continued its sluggish pattern, with limited improvement in actual transactions. On the supply side, to ease financial turnover and loss reduction pressures, some enterprises had slightly lowered their quotations to destock, but downstream buying sentiment was weak, and the transaction growth driven by price cuts was extremely limited. On the demand side, Co3O4 enterprises remained under high inventory pressure, and with no signs of recovery in end-use consumption, procurement pace remained stagnant. In the short term, cobalt chloride prices will continue to drift lower.

Cobalt salt (Co3O4):

This week, the Co3O4 market atmosphere remained sluggish, with sporadic transactions. On the supply side, most producers, under a pattern of high inventories, thin margins, and lingering concerns over inventory buildup, continued a low operating rate strategy. On the demand side, cathode material producers made occasional inquiries, but actual orders were scarce. Existing raw material inventory was sufficient for short-term production, and the urgency for restocking was absent. Overall, the trend of Co3O4 prices weakening under pressure in the short term is unlikely to change.

Cobalt powder and others:

This week, the cobalt powder market remained weak, with no improvement in transaction atmosphere. On the supply side, mainstream producer quotations shifted downward to 420,000-440,000 yuan/mt, with actual transaction centers following suit, and some low-priced orders had already dipped to 400,000-410,000 yuan/mt. Traders were more willing to offer concessions, increasing low-priced cargo in the market and further dragging down psychological price levels. Downstream cemented carbide enterprises' orders remained weak, with slow raw material consumption. Besides long-term contract pickups, spot orders were sporadic. On the raw material side, cobalt carbonate prices continued to weaken, further eroding cost support. In the short term, the cobalt powder market lacks positive catalysts, and prices may continue to grind lower in a bottom-probing pattern.

Ternary cathode precursor:

This week, ternary cathode precursor prices weakened, with nickel sulphate and cobalt sulphate prices declining during the week, while manganese sulphate prices edged up.

On the discount front, for September and Q3 orders, some producers were still inclined to hold prices firm due to higher raw sulphate costs earlier. For long-term contracts, some producers had already agreed on terms at the beginning of the year, and most producers had not seen coefficient increases. Downstream acceptance of coefficient increases was also weak for quarterly orders. Except for some top-tier producers with a certain degree of pricing power, most producers' overall coefficients remained stable compared with Q2. For spot orders, given the relatively weak performance of nickel-cobalt sulphate prices recently, some downstream enterprises sought raw material toll processing or expanded self-produced capacity. September order coefficients were expected to remain under pressure.

On the production side, top-tier producers' export orders continued to perform well this month, with production schedules at relatively high levels. Domestic top-tier producers also maintained high production loads, but some small and medium-sized producers still had relatively low production schedules due to the off-season.

Looking ahead, sulphate prices have not yet shown a significant rebound. Subsequent new order prices need to focus on actual downstream demand during the September-October peak season.

Ternary cathode material:

This week, ternary cathode material prices declined somewhat. From the raw material side, nickel sulphate prices continued to weaken, cobalt sulphate prices saw a notable decline, while lithium carbonate and lithium hydroxide were at relatively high levels with significant fluctuations. On the transaction sentiment front, given that cobalt prices still have downside room and the subsequent trend of lithium chemicals remains unclear, battery cell manufacturers' willingness to restock was weak this week. Transactions were relatively sluggish, with the market mainly executing existing orders. On the demand side, in the domestic EV market, some battery cell manufacturers slowed down their cargo pick-up pace, mainly due to automaker orders being weaker than expected. Export orders, however, remained at high levels and were expected to continue improving. On the consumer market front, it remained mediocre recently, with no signs of improvement. Notably, 9-series materials have shown strong demand in recent months, with their share rising quickly.

LCO:

This week, the LCO market showed no significant fluctuations compared with last week, remaining overall stable but weak. On the supply side, downstream demand recovery was slow. Enterprise production and shipments had been at low levels since the beginning of the year. Earlier price cuts to compete for market share had significantly compressed profit margins, but the actual boost to shipments was minimal. On the demand side, although battery cell manufacturers' production schedules rebounded slightly MoM, the transmission effect to LCO was not smooth. Meanwhile, the replacement ratio of downstream ternary cathode materials continued to rise, further weakening LCO demand support. Overall, LCO prices may still have room to decline in the near term.

News:    

[Azure: Unable to Verify If Company Is Unitree Robotics' Exclusive Supplier] An investor asked Azure on an interactive platform: "As the exclusive supplier of robot battery cells for Unitree Robotics, Azure has ushered in a new strategic development opportunity. Can the company's current robot battery cell capacity meet Unitree Robotics' expansion needs? Additionally, the current driving range of humanoid robot lithium batteries is generally only two to three hours, becoming a major pain point restricting the large-scale popularization of humanoid robots. Does Azure have any technological breakthroughs in this regard?" In response, Azure replied: "We cannot verify whether the company is the exclusive supplier for this client. Transactions between the company and this client are proceeding normally, and the company's products meet the client's technical requirements." (Jin10 Data APP)

[Lyric: Solid-State Battery Equipment Business Fully Transitions to Customer Verification and Small-Scale Delivery Stage] Lyric recently stated during institutional surveys that the all-solid-state battery full-line project delivered to a top-tier automaker client had been completed and achieved phased acceptance, realizing a leap from laboratory technology to a pilot line. Additionally, it had received orders for solid-state battery key equipment and a pilot line from two top-tier battery clients, currently in the production and assembly phase at the factory. Overall, the solid-state battery equipment business has fully transitioned from the technology R&D stage to the customer verification and small-scale delivery stage. (Jin10 Data APP)

[Sources: Trump Administration Plans to Reduce Tariff on Canadian Auto Imports from 25% to 15%] According to sources, the Trump administration is preparing to reduce the tariff on Canadian auto imports from 25% to 15% as part of a broader agreement. Under the deal, Canada would cancel retaliatory trade measures against the US. The White House imposed 25% tariffs on foreign-made cars and trucks last year. For vehicles produced in Canada and Mexico, the tariff applies only to non-US content in the vehicles, a move aimed at encouraging companies to shift more production to the US. Sources said the new 15% tariff rate would also follow this "non-US content" calculation rule. Currently, the specific details of the agreement have not been finalized. Additionally, Trump has previously revised terms at the last minute when a trade deal was about to be reached, or even canceled deals outright, so the final outcome remains uncertain. (Jin10 Data APP)

Data source statement: Data other than publicly available information is processed by SMM based on public information, market communication, and relying on SMM's internal database models, for reference only and does not constitute decision-making advice.

SMM New Energy Research Team

Wang Cong 021-51666838

Ma Rui 021-51595780

Lin Ziya 86-2151666902

Feng Disheng 021-51666714

Lyu Yanlin 021-20707875

Zhou Zhicheng 021-51666711

Wang Zihan 021-51666914

Wang Jie 021-51595902

Zhang Haohan 021-51666752

Chen Bolin 021-51666836

Xu Mengqi 021-20707868