[SMM Analysis] Cobalt Market's Peak Season Begins Slowly: Demand Recovery Fails to Gain Momentum

This week (August 28 - September 3), downstream players gradually returned from the summer break, marking the official start of the traditional "Golden September, Silver October" peak consumption season. The cobalt market, however, failed to see the long-awaited recovery. Across the product chain, cobalt metal moved sideways, cobalt intermediates remained deadlocked, cobalt sulfate held steady on the surface, while cobalt powder broke below the 400,000 yuan/mt mark. A weaker-than-expected demand recovery was the common thread running through the market this week.

On the raw material side, the stalemate in the cobalt intermediates market persisted, with the psychological price gap between upstream and downstream players widening further. Most miners held their offer intentions firm around $19-20/lb, while downstream buying intentions retreated further to around $15-16/lb. With divergence deepening, tenders during the week mostly failed to conclude, and transactions remained difficult to achieve.

Amid the raw material deadlock, the cost-profit balance for smelters continued to swing. The low end of SMM's payable coefficient for cobalt intermediates (against SMM's average cobalt sulfate price) rebounded to around 77 from 70 last week, while the processing fee for cobalt intermediates edged up to 30,027 yuan/mt in metal content, pointing to a modest recovery in smelting margins. On the other hand, the MHP cobalt payable continued to fall, with deals concluded at 65% during the week, putting spot production costs at around 60,000 yuan/mt and further eroding cost support for cobalt salts.

The pressure from falling costs was most evident in the cobalt sulfate market. Although market prices did not decline this week, mainstream smelter offers clustered around three levels - 63,000, 65,000 and 68,000 yuan/mt - with the differences mainly reflecting feedstock types and inventory pressure. Some traders, worried about further price declines, were considering offloading old cargoes at around 61,000-62,000 yuan/mt. On the demand side, peak-season strength was barely visible: some ternary battery material producers began making inquiries but showed no intention of actively concluding deals, while cobalt tetroxide producers, weighed down by high inventories and weak demand, remained absent from procurement.

The metal segment continued to diverge. Cobalt metal traded in a narrow range around the 300,000 yuan/mt level on the electronic platform, with mainstream smelters keeping ex-works prices at 310,000 yuan/mt and traders' offers steady at a premium of 1,000-13,000 yuan/mt. Downstream buyers gradually resumed procurement after the summer break, but cautious about further price declines, they mostly stuck to small, need-based orders, with no bulk buying in sight. Cobalt powder, dragged down by both falling costs and weak demand, saw smelter offers break below the 400,000 yuan/mt mark, with some cobalt carbonate producers cutting their offers to around 170,000 yuan/mt, while downstream buying interest remained subdued and transactions stayed thin. The SMM cobalt metal-to-cobalt powder price ratio held around 0.73, showing no sign of convergence within the metal segment.

Looking ahead, the end of the summer break has not brought a meaningful pick-up in demand, and market confidence remains fragile. Cobalt metal is expected to continue range-bound trading as supply-side price support offsets cautious demand, with attention on the pace of downstream procurement recovery and the possibility of concentrated restocking. For cobalt salts and cobalt powder, prices are likely to keep trending lower amid fluctuations in September-October under the dual pressure of falling costs and weak demand. Overall, a meaningful turnaround in the cobalt market will require a clear improvement in demand or supportive policy stimulus.