Cobalt prices rebounded, lithium prices underpinned by costs

SHANGHAI, May 27 (SMM) – The short-term supply tightness of cobalt raw materials lifted cobalt salt prices last week, but limited trades and continued weakness in consumption may cap any rebound in the near-term prices. Prices of lithium carbonate will unlikely to extend declines given the raw materials costs and the trade prospects in Q2 this year. 

An inflow of capitals to the refined cobalt market bolstered cobalt prices last week, and some small-scale downstream plants restocked as required. Sellers hiked offers on expectations of raw materials supply shortage, but ample inventories at major consumers kept overall trades subdued. Trades in the overseas market remained muted with almost no spot deals last week. 

In the cobalt hydroxide market, operations at African ports have not fully resumed and some departing cargoes are expected to arrive at the Chinese market after mid-June. While the overseas prices of cobalt held stable, discounts of cobalt raw materials narrowed. Purchases by some Chinese consumers in urgent need of cobalt raw materials lifted the spot raw materials prices at ports. 

Enquires in the lithium salt market improved last week but actual trades were limited. Some sellers remained keen to destock, leading to the weekly drop in prices, but the bargaining room for buyers decreased. Some producers of lithium manganese oxide (LMO), the downstream of battery-grade lithium carbonate market, tended to commence negotiations for long-term contracts as they see little downsides in lithium carbonate prices. 

In the power battery market, most battery producers and automakers have increased production, but slow consumption kept the output from returning to levels of the same period last year. Local governments are expected to roll out more supportive policies to boost consumption of new energy vehicles, as it is highlighted in the 2020 government work report that China will continue to promote NEVs to stimulate new consumption and facilitate the industrial upgrade. 

On the consumer battery front, exports remained suspended with the ongoing lockdowns in export destinations such as some European countries, the US and India. Typically, consumer battery exports account for the majority of China’s total production of consumer batteries. Given current low in-plant inventories of consumer batteries, some battery mills have ramped up operations for the preparation of export orders next month. 

SMM assessed prices of refined cobalt (Co≥99.8%, delivered to factory with VAT included) at 248,000-258,000 yuan/mt as of May 27, up 8,000 yuan/mt from a week ago. 

Prices of battery-grade lithium carbonate shed 250 yuan/mt week on week, standing at 42,500-44,000 yuan/mt as of May 26, with prices of industrial-grade materials falling 750 yuan/mt on the week to 33,000-38,500 yuan/mt.