[SMM Analysis] Weak Demand Thwarts Mining Firms' Price-Support Efforts; Cobalt Market Trends Diverge This Week

Domestic cobalt market saw growing divergence between bulls and bears this week (Aug 24‑27). Upstream miners frequently attempted to prop up prices, while downstream demand remained in the summer lull. Continuous tussle between the two sides prevented a uniform market performance across cobalt products. Cobalt metal rose while three cobalt salt products fell, with divergence standing as the key feature of this week’s market.

On the raw‑material front, market sentiment dipped first then rebounded. Recently, an overseas player sold off‑spec material in small volumes at USD 15/lb, weighing heavily on market sentiment. Later, an overseas miner announced purchases of low‑grade intermediate feed at USD 16/lb and below, sending a clear price‑support signal. Nevertheless, a wide bid‑ask gap persisted: most miners held offer intentions above USD 20/lb, whereas downstream buying interest fell to USD 15‑18/lb. Recent tenders mostly ended with no award and transactions made little headway. As of Thursday, SMM cobalt intermediate (CIF China) was assessed at USD 18‑20/lb, averaging USD 19/lb, down USD 2.5/lb week‑on‑week.

The sharp downward shift in raw‑material costs exerted two‑sided impacts on smelters. On the profit side, SMM cobalt intermediate pricing coefficient (against SMM average cobalt sulfate price) tumbled from 87 last week to around 70 this week. Cobalt intermediate processing fees climbed by about RMB 2,000 to RMB 29,752 per metric ton of cobalt metal unit. Raw‑material prices fell faster than cobalt salt prices. Spot‑price calculations show smelting margins have moved out of loss‑making territory, lifting production appetite among smelters. On the price side, eroded raw‑material cost support dragged down cobalt salt performances.

Cobalt sulfate prices reflected this transmission mechanism. Weakened cost support plus low‑price Indonesian cargo traded at RMB 63,000/t pushed cobalt sulfate assessments lower. The MHP cobalt coefficient retreated to around 70, bringing spot production cost down to roughly RMB 69,000/t. Offers converged this week; both primary‑feed and recycler players defended the RMB 70,000/t threshold and were open to shipments at RMB 65,000‑68,000/t on firm downstream buying interest. Downstream bids, however, anchored at RMB 63,000/t or below. The wide gap kept transaction volumes subdued. Toward month‑end, some players began concluding new orders. Downstream sought offers at 90% or below of SMM low assessment, while upstream insisted on 93‑95%, keeping bargaining ongoing. As of Thursday, SMM cobalt sulfate stood at RMB 70,000‑72,000/t with an average of RMB 71,000/t, falling RMB 2,500/t from last Friday.

Divergence was also notable for metal products. Amid sluggish demand, cobalt metal and cobalt powder moved in opposite directions. Buoyed by miners’ price‑support signals, electronic board quotes for cobalt metal rebounded above RMB 300,000/t and fluctuated at that level. Traders who previously suspended quotations resumed offers, reporting premiums of RMB 1,000‑13,000/t. Major smelters lowered ex‑factory prices to RMB 310,000/t. SMM average cobalt metal assessment reached RMB 307,500/t, gaining RMB 2,500/t week‑on‑week. Cobalt powder suffered from persistently weak orders from downstream hard‑alloy producers. Smelter spot offers slipped to RMB 410,000‑430,000/t, and bulk tenders closed at RMB 400,000/t or slightly lower. SMM noted the lowest traded price of RMB 385,000/t among traders stemmed from old inventory; new material cannot match this level due to cost constraints. Cobalt carbonate, a feedstock for cobalt powder, stabilized at RMB 180,000‑190,000/t and failed to lift cobalt powder prices effectively. As of Thursday, SMM average cobalt‑powder price was RMB 420,000/t, down RMB 10,000/t week‑on‑week. The price ratio of cobalt metal to cobalt powder rose from 0.71 to 0.73, widening their price spread further.

Looking ahead, constraints and supports are largely consistent across products. Insufficient demand is the main price depressant, while stocking expectations for the traditional “Golden September & Silver October” season provide floor support. Cobalt prices are likely to stop falling and stabilize from late August to early September. A shift from stabilization to rally still requires clear signals of concentrated downstream purchasing. A sustained trend reversal is unlikely before such signals emerge.