[SMM Cobalt Morning Meeting Summary] Weak Demand and Falling Raw Material Prices Increase Destocking Pressure Across the Entire Industry Chain

Refined cobalt:

At the start of this week, the refined cobalt market maintained a consolidation pattern. After futures prices for refined cobalt fell steadily, traders raised their quoted basis, and currently almost no enterprise is offering at parity, with the minimum quoted basis at 1,000-2,000 yuan. Mainstream smelters maintained ex-works prices at 270,000 yuan/mt. Downstream demand remained sluggish, and enterprises continued just-in-time procurement. Overall, until various cobalt products stop falling and downstream forms sustained restocking, refined cobalt prices do not yet have the conditions to break out of consolidating at lows.

Intermediate products:

At the start of this week, the cobalt intermediate products market continued the sluggish pattern of no quotes, no inquiries, and no transactions, but beneath the calm, the psychological price levels of buyers and sellers were still locked in a quiet standoff. On the supply side, leading overseas enterprises previously announced they would purchase intermediate products in the market at $14.5/lb, with a clear intention to support the market, which is currently the main supporting factor. On the demand side, downstream purchasing willingness remained sluggish, and some miners and downstream enterprises reported that, against the backdrop of persistently falling prices for other cobalt products, they could currently only accept prices below $13/lb. At present, there remains a clear gap between the support purchase price and downstream psychological price levels. The direction of the intermediate products market after the holiday will depend on the actual transactions of support purchases and the negotiation results between miners and smelters.

Cobalt sulphate:

At the start of this week, cobalt sulphate prices continued to grind lower. Although mainstream enterprises maintained cobalt sulphate quotes near 60,000 yuan/mt this week, actual transactions were very difficult, and downstream still had no purchasing intention. Some downstream players believed cobalt sulphate prices would fall below 50,000 yuan/mt in the future. Under the influence of bearish sentiment, only a few enterprises made just-in-time procurement. Although there were no new transactions for MHP cobalt payables and recycled cobalt payables, they also showed a downward trend overall, with cost support continuing to weaken, opening new room for smelters to cut prices and sell. Before there is a substantive improvement on the demand side, the cycle of "price cuts—losses—raw material pressure—cost declines—further price cuts" is expected to continue dominating the direction of the cobalt sulphate market.

Cobalt chloride:

At the start of this week, cobalt chloride quotes were temporarily stable, but the price center remained below pre-holiday levels, and enterprises' willingness to further lower quotes weakened. On the supply side, demand had yet to show improvement, and the entire industry remained in a destocking phase. Cobalt chloride production in September pulled back significantly MoM, and production cuts remained the main way for producers to digest inventory pressure. Enterprises that had planned to resume production before the holiday turned to a wait-and-see stance due to persistently weak downstream demand, and the scope of production suspensions continued to expand. On the demand side, production cuts in the downstream Co3O4 segment continued to widen, further contracting raw material procurement demand. Market transactions remained sluggish, dominated by very small volumes of spot orders and internal self-supply within integrated enterprises. Coupled with the industry's annual conference held this week, most market participants chose to reduce trading and generally waited for order developments during and after the conference. Market trading activity visibly thinned, and short-term price fluctuation room was limited. Overall, if demand still does not show substantive recovery after the conference, short-term cobalt chloride prices will continue to decline narrowly.

Cobalt salts (Co3O4):

At the start of this week, Co3O4 quotes were basically flat compared with last week, but the post-holiday price center had shifted further down from pre-holiday levels. The overall market remained in a grind-lower atmosphere, and pessimistic expectations had not yet reversed. On the supply side, affected by persistently weak downstream demand, multiple enterprises remained in production cuts, and some enterprises' inventories were still at relatively high levels. On the demand side, existing shipments were mainly for delivering earlier long-term contracts and undertaking processing business, while new purchases were almost absent. Market participants were mostly waiting to trade until after the industry's annual conference this week. If market sentiment still does not improve after the conference and transactions remain sluggish, prices may continue to be revised down. Overall, short-term Co3O4 prices will continue to decline narrowly.

Cobalt powder and others:

At the start of this week, cobalt powder market transactions remained sluggish. Top-tier smelters lowered quotes to around 340,000 yuan/mt, and some small and medium-sized enterprises further lowered quotes to 325,000-330,000 yuan/mt to secure transactions. The crux of the current market weakness lies in earlier stockpiling behavior: during the previous period of persistently rising cobalt and tungsten prices, many cemented carbide enterprises purchased large quantities of raw materials. As both raw material and finished product prices pulled back, high-priced inventories caused these enterprises to fall into relatively severe losses, forcing their production pace to slow. The consumption cycle of existing inventories was further extended, and new purchases were repeatedly postponed. For the cobalt powder market, the timing of demand recovery depends not only on the recovery of end-use orders but also on the pace of destocking of downstream high-priced inventories. Before that, the sluggish transaction situation will be difficult to fundamentally change.

Ternary cathode precursor:

At the start of the week, ternary cathode precursor prices weakened. Today, cobalt sulphate and nickel sulphate prices both declined, while manganese sulphate prices held stable.

Regarding discounts, for October and Q4 orders, some producers still had willingness to hold coefficients firm due to the earlier high cost of sulphate raw materials. For long-term contracts, some producers had already agreed on annual contracts at the beginning of the year, and most producers had not yet raised coefficients. Downstream acceptance of coefficient increases for quarterly orders was also weak, and Q4 long-term contract coefficients are expected to remain stable to weak. For spot orders, due to the relatively weak performance of nickel and cobalt salt prices recently, coupled with weak downstream demand for some producers, October order coefficients are expected to decline.

On the production side, top-tier producers' export orders remained strong this month, with production schedules at relatively high levels. However, some domestic top-tier producers saw their operating rates decline due to end-use demand falling short of expectations and tightness in key raw materials. Although this month improved slightly MoM, overall it remained below Q3 highs.

Looking ahead, sulphate prices have not yet shown a clear rebound, and future new order prices will need to focus on actual downstream demand in Q4.

Ternary cathode material:

At the start of this week, ternary cathode material prices declined again. From the raw material side, nickel sulphate prices continued to grind lower, cobalt sulphate prices kept falling, and lithium carbonate and lithium hydroxide prices dropped sharply again due to expectations of downward revisions in battery cell production schedules, dragging ternary cathode material prices significantly lower. In terms of transactions, due to the large decline in raw material prices and no signs of stopping the fall yet, market buying sentiment became more cautious, with an overall wait-and-see stance maintained. Meanwhile, as raw material prices declined significantly, discount coefficients also had the possibility of further downward adjustment. On the demand side, the domestic ternary EV market maintained a weak recovery trend in October, and overall Q4 expectations remained weak. Export orders in the EV market outside China were relatively good, but there was no further new demand. The digital consumer market saw some boost in demand driven by new phone launches in September.

LCO:

After the National Day holiday, the domestic LCO market remained weak overall. The traditional peak-season expectations previously anticipated by the market failed to materialize, and industry fundamentals remained under pressure. Upstream Co3O4 prices continued to decline, with cost support continuing to weaken, driving LCO product quotes to follow lower. On the supply side, domestic cathode material enterprises generally maintained a cautious production strategy of producing based on sales, and industry output remained stable. However, weakness on the demand side was prominent: downstream end-user customers had insufficient willingness to stockpile, and purchases were mostly just-in-time and sporadic. The overall pace of inventory digestion across the industry chain was slow, and the supply-demand pattern had not yet shown substantive improvement. The dual pressure from falling costs and sluggish end-use demand persisted. Overall, the weak LCO market continued after the holiday, with prices showing a downward consolidation trend. If end-use demand continues to show no improvement and peak-season conditions remain absent, LCO prices still have room for further decline.

News:    

[CATL and Seres sign long-term strategic cooperation agreement] On October 10, CATL and Seres Group signed a long-term strategic cooperation agreement in Chongqing. Since the founding of the AITO brand, all its car models have been equipped with CATL batteries, and cumulative deliveries have surpassed 1.2 million units to date. Taking this as a new starting point, AITO will continue to equip all its models with CATL batteries over the long term. The two parties will comprehensively deepen strategic collaboration in three core areas: Expanding "factory-within-a-factory" capacity: Accelerating the construction of the second phase of the "factory-within-a-factory" at the Seres Super Factory, with planned annual capacity of 10-12 GWh for the second phase. Upon completion, the combined annual capacity of phases one and two will exceed 20 GWh. Building a supercharging ecosystem: Cooperating on supercharging networks and battery services to create a service system covering the full life cycle and upgrade the driving experience for car owners. Accelerating global expansion: Jointly exploring markets outside China in Europe, the Middle East, and Central Asia to bring quality products and services to the world and set a new benchmark for new energy intelligent manufacturing going global. (Jin10 Data APP)

[Ministry of Finance: VAT export rebate rate for NEVs to be reduced from 13% to 9%] The Ministry of Finance issued an announcement on adjusting export rebate policies for some products. Starting from April 1, 2027, the VAT export rebate rate for NEVs will be reduced from 13% to 9%. Starting from April 1, 2027, VAT export rebates for products such as e-cigarette devices will be cancelled. For the above products that are subject to consumption tax, the export consumption tax policy will not be adjusted and the consumption tax refund (exemption) policy will continue to apply. (Ministry of Finance)

[January-September, China's NEV production and sales both exceeded 12 million units, up 11% and 11.1% YoY respectively] The latest data released by CAAM on the 12th showed that from January to September this year, China's NEV market production and sales achieved double-digit growth, with particularly strong performance in markets outside China. The latest data showed that from January to September this year, China's NEV market production and sales reached 12.483 million units and 12.472 million units respectively, up 11% and 11.1% YoY respectively. NEV sales reached 53.6% of total new vehicle sales. In the international market, from January to September this year, NEV exports reached 4.006 million units, up 1.3x YoY. (CCTV News)

[MOFCOM spokesperson answers reporters' questions on China-EU consensus on hybrid vehicles and EV consultations] Q: Recently, China and the EU conducted in-depth discussions on hybrid vehicle and EV trade under the trade and investment consultation mechanism, avoiding an escalation of the situation. Some foreign media have speculated about details such as the quantity of hybrid vehicle trade arrangements. What is China's comment? A: Regarding hybrid vehicles, both sides emphasized and confirmed three basic principles. First, respect facts. According to Eurostat data, the EU imported 107,000 hybrid vehicles from China in 2024 and 302,000 in 2025. The two sides reached an upward arrangement based on 2025 levels, ensuring export space and stable growth for Chinese enterprises, and accommodating the reasonable concerns of both sides' industries based on reality. Second, non-discrimination. No measures will specifically target Chinese products, nor will Chinese enterprises be treated in a discriminatory manner. The quota obtained by China will not be lower than that of any other import source for the EU. Third, compliance. Both sides confirmed that trade arrangements should comply with WTO rules. China reserves all rights under the WTO framework, including resorting to dispute settlement and requesting trade compensation. These three basic principles run throughout and serve as a solid foundation for safeguarding the legitimate rights and interests of Chinese enterprises. (Jin10 Data APP)

Data source statement: Except for publicly available information, all other data are processed by SMM based on public information, market communication, and SMM's internal database models, and are for reference only and do 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