【SMM Analysis：Price Spread Between Cobalt Salts and Refined Cobalt Continues to Narrow, Refined Cobalt Remains Relatively Profitable】

In July 2024, the price spread between cobalt salts and refined cobalt continued to narrow. By category, in terms of metal content, the average price spread between cobalt sulphate and refined cobalt in July was about 63,000 yuan/mt, down 16% MoM; the average price spread between Co3O4 and refined cobalt was about 36,000 yuan/mt, down 27% MoM; the price spread between cobalt chloride and refined cobalt was about 56,000 yuan/mt, down 19% MoM. Compared to other cobalt salts, refined cobalt remains a relatively profitable segment.

Breaking it down, cobalt sulphate: In July 2024, the average spot cost of cobalt sulphate was 29,389 yuan/mt, down 4% MoM; the average spot profit was -363 yuan/mt, down 96% MoM. Entering August, raw material prices still had a certain decline, and the cost of cobalt sulphate might still have a slight downward possibility. From the spot market perspective, due to the current low cobalt prices and some production cuts at cobalt sulphate smelters. However, due to the high overall social inventory and the low demand for scattered raw material replenishment from downstream ternary cathode precursor and Co3O4 smelters, the price of cobalt sulphate might still have some downward trend, thereby maintaining the profit margin of cobalt sulphate in a loss.

Regarding Co3O4: In July 2024, the average spot cost of Co3O4 was 122,823 yuan/mt, down 3% MoM from June; the average spot profit was 612 yuan/mt, up 165% MoM from June. Entering August, due to a slight easing in the price of raw material cobalt salts, the cost of Co3O4 may slightly decrease. From the spot market perspective, as the demand from end-users remains decent, the order situation for Co3O4 refineries is optimistic. Therefore, with the spot cost at the breakeven point, Co3O4 companies have limited room for further price concessions. It is expected that the profit margin for Co3O4 in August will remain relatively stable.

Refined cobalt: In July 2024, the average spot cost of refined cobalt was 170,361 yuan/mt, down 3% MoM; the average spot profit was 36,421 yuan/mt, down 25% MoM. Entering August, due to slight signs of easing in raw material prices, the cost of refined cobalt may slightly decrease. In the spot market, although refined cobalt smelters still have some fixed long-term contract orders to fulfill, the demand for spot orders is minimal. Therefore, with high social inventory levels, refined cobalt prices may still have a downward trend, and profit margins are expected to remain narrow.