[SMM Analysis] Refined Cobalt Rises While Cobalt Salt Halts Losses, but Over Two Months of Inventory Still Weighs Overhead: How Long Can Sentiment-Driven Prices Last?

This week, the cobalt salt market got a long-awaited breather. At the start of the week, refined cobalt futures rallied sharply, loosening the bearish sentiment that had built up during the prolonged grind lower, and both cobalt chloride and Co3O4 prices halted losses and stabilized. But a closer look at this stabilization shows that what drove prices was not demand, but sentiment, and the same sentiment triggered very different reactions upstream and downstream: for cobalt chloride, only sellers changed their behavior, while for Co3O4, buyers' voices began to be heard.

1. Cobalt chloride: sellers held prices firm, buyers did not accept, and the price spread widened instead of narrowing

, after refined cobalt strengthened, suppliers' willingness to sell at low prices visibly receded, previously price-suppressed cargoes were withdrawn from the market, and producers' willingness to hold prices firm strengthened compared with earlier. However, this boost largely stayed at the quotation level. Downstream Co3O4 segment inventories remained at relatively high levels, purchase willingness stayed low, and their psychological price levels were clearly below the quotes after upstream price firming. The price spread between buyers and sellers did not narrow but instead widened further, and trading quickly returned to a wait-and-see stance, with very few actual deals concluded. In other words, what changed this week was only sellers' quoting behavior; buyers' decision-making basis did not change. Without transaction support, the firmness of quotes was more of a posture.

2. Co3O4: lock-in intentions warmed up, but it looked more like dip-buying

was somewhat different. The sharp rise in refined cobalt boosted downstream sentiment, cathode plant purchasing sentiment clearly recovered, and multiple enterprises had already begun contacting Co3O4 producers to discuss lock-in orders, with intended volumes not small. Some cathode plants judged that prices had reached lows and that bearish factors were largely priced in, shifting toward certain expectations for price hikes, and concerns about buying right before further declines faded. On the supply side, quotes remained generally stable, and willingness to hold prices firm strengthened as well. However, judging from the nature of the lock-in orders, this was more a phased dip-buying by cathode plants at current price levels than confidence in future demand, and most lock-in orders were still at the negotiation stage. The market's repair so far was reflected only in willingness, not yet in actual transactions.

3. Inventories and outlook: more than two months of buffer, sentiment-driven prices are hard to sustain

Although sentiment recovered, inventory pressure did not ease materially. SMM data showed that as of October, combined upstream and downstream inventories in the Co3O4 segment could still cover more than two months of demand. Since the beginning of the year, physical inventories in this segment had continued to decline, but this was achieved mainly through proactive production cuts by enterprises, not demand expansion. As downstream demand shrank in tandem, days of inventories stopped falling and began to rebound from August, and destocking progress slowed noticeably. With such a thick inventory buffer, even if this round of lock-in orders is gradually fulfilled, downstream players will find it difficult to generate sustained purchasing demand, and Co3O4 producers likewise lack the impetus to start restocking cobalt chloride.

SMM believes that the current purchasing sentiment can only provide short-term support for prices, and the medium and long-term oversupply pattern in the cobalt market has not changed. In the short term, Co3O4 prices are expected to remain in sideways consolidation. Lock-in order fulfillment may bring phased support, but sustainability is limited. The price spread between cobalt chloride buyers and sellers remains wide, and if downstream inventory destocking shows no clear progress, the price center may still shift lower again. Going forward, attention should focus on whether the strength in refined cobalt futures can persist, whether cathode plant lock-in orders can actually be fulfilled, and whether Co3O4 destocking can accelerate and drive the start of cobalt chloride restocking.