[SMM Analysis] Cobalt Salt Trading Stalls Before Holidays; New Phone Sales Fail to Lift Upstream Demand

This week, the cobalt chloride and cobalt tetroxide markets remained weak, with prices declining in tandem and transactions across the industry chain nearly at a standstill. Cobalt chloride saw a relatively notable decline, while cobalt tetroxide edged down slightly. With the Mid-Autumn Festival and National Day holidays approaching, upstream and downstream enterprises have successively entered their pre-holiday wind-down phase, further dampening already sluggish demand.

Upstream, the "quotes without transactions" pattern in the cobalt chloride market has become further entrenched. Although a few sporadic deals were concluded this week, volumes were extremely limited, and most activity remained at the inquiry and offer stage. Amid the absence of demand, some enterprises showed noticeably less willingness to quote, and a considerable number of smelters plan to resume normal operations only after the National Day holiday. Support from the cost side is also loosening: the price center of cobalt intermediates continued to shift downward, miners' tenders remained difficult to close, smelters showed low willingness to purchase raw materials, and recent imports of cobalt intermediates have also fallen noticeably. Based on current raw material prices, smelting margins for cobalt chloride have been squeezed to relatively low levels, and prices are gradually approaching the cost line. However, amid the demand vacuum, cost support for prices remains insufficient.

In the midstream cobalt tetroxide segment, the decline this week was notably smaller than that of cobalt chloride, and the price spread between the two widened. However, this reflects scarce spot orders and a lack of effective transaction validation for prices rather than any improvement in demand. Current shipments are mostly under previously signed long-term contracts, while other producers have turned to tolling business to sustain operations, and the scope of production halts and cuts across the industry continues to expand. Downstream, lithium cobalt oxide producers still hold raw material inventories sufficient to cover short-term consumption. Coupled with weak demand in September, restocking urgency is low, and most have already begun arranging holiday breaks ahead of the festivals. In terms of production schedules, operations will be suspended in early October due to the National Day holiday, and equipment restart and commissioning after the holiday will take some time. October output is therefore expected to fall significantly, and demand for upstream cobalt chloride will shrink accordingly.

Notably, the consumer electronics end market entered a period of intensive new product launches this month. Several major domestic smartphone brands released their annual flagship models, and although some high-end models are priced significantly higher than their predecessors, their first-sale performance still outpaced the previous generation. First-sale volumes of new foldable phones also rose sharply year-on-year, and flagship models from some other brands are expected to debut around the end of the month. However, it will take time for the end-market recovery to feed through to the upstream. With earlier inventories in the cell and cathode segments yet to be digested, strong new phone sales are unlikely to translate into actual purchases of cobalt tetroxide and cobalt chloride in the short term.

Overall, the core contradiction in the cobalt salt market remains on the demand side. Pre-holiday stockpiling has shown no signs of picking up, and proactive supply cuts have been unable to provide effective price support. As prices approach the cost line, the pace of decline in cobalt chloride may slow, but reduced cobalt tetroxide output in October will continue to weigh on upstream shipments. The market currently has no clear expectations for the post-holiday period, and enterprises are purchasing cautiously on an as-needed, month-by-month basis. In the short term, prices of both cobalt chloride and cobalt tetroxide are expected to continue edging down within a narrow range, with the market's focus on whether sales of new smartphones can drive downstream restocking.