Will Cobalt Sulphate Market Usher in Spring with Sharp Price Increase in One Week?

SHANGHAI, Feb 17 (SMM) -The price of cobalt sulphate has continued to decline recently and were lower than the prices of nickel sulphate on February 8. But the prices of cobalt sulphate rose 1,000 yuan/mt this week. Does it imply that the market usher in spring? The answer may not be what you want. 

Reasons for the recent price hike:

Falling output and low inventory

Since 2022, the prices of cobalt sulphate has continued to fall amid high inventory. After the peak season of power industry, the electronics market weakened in November 2022 and the demand for lithium batteries plummeted. As such, smelters were unwilling to produce and focused on the sale of finished products. Coupled with the Chinese New Year holiday, the operating rates of cobalt sulphate fell sharply in January, and the inventory continued to decrease.  

Costs bottomed, supporting prices

At present, the prices of imported intermediate products were lower than $8.5/pound, which approached the costs of mines. Some people in the industry believes that copper-cobalt mines can allocate part of the profits of copper to the costs of cobalt when the economic benefits of copper are good, but there are still many mining companies that calculate the cost separately, so the current costs of cobalt ore is close to bottom line. Due to special reasons, leading mining companies cannot transport ores to China, and the problem is expected to be resolved in the first quarter. The new projects of leading mining enterprises will be commissioned in the second quarter. Some mines and retail traders have a strong willingness to raise prices, hence the recent discounts shrank compared with previous years.  

Traders purchased on dips while smelters were unwilling to sell

Traders actively purchased cobalt sulphate as they believed the prices have reached the bottom. According to SMM research, traders have brought about 1,000 mt in metal content of cobalt sulphate after the Chinese New Year holiday. At present, in light of the declining inventory, smelters were reluctance to sell.

But the weak demand is still the key factor. According to SMM research, the recovery of domestic demand was still less than expected and the electronics market remained subdued. Most integrated precursor enterprises produced by themselves, and thus the demand for cobalt sulphate was relatively sporadic. Therefore, the recent prices lacked the support from demand. In light of supply surplus, the prices of cobalt salt may fluctuate in the short term and are unlikely to increase in the long run.