[SMM Analysis]Tight Aluminum Scrap Supply Lifts Price Center, Highlighting Resilience in ADC12 Cost Support

Spot cobalt sulphate prices remained generally stable this week. Supply side, smelter quotations showed relatively small changes from the previous week, with enterprises producing cobalt sulphate from intermediate products maintaining prices at around 91,000-93,000 yuan/mt, while MHP and recycling enterprises kept quotations near 86,000-88,000 yuan/mt. Demand side, ternary cathode precursor and Co3O4 enterprises remained cautious in procurement due to the rapid rise in cobalt sulphate prices and incomplete order locking; cathode enterprises have completed annual stockpiling, leading to a slight weakening in stockpiling sentiment. Overall, the rapid price increase since September has resulted in a significant divergence in price expectations between upstream and downstream enterprises. The market is expected to enter a phase of contention in the short term, with cobalt sulphate prices likely to stabilize as downstream players gradually digest and accept the current price levels.

[SMM Chromium Daily Review: Weak Market Performance Awaits Steel Mill Tender Price] October 22, 2025: The ex-factory price for high-carbon ferrochrome in Inner Mongolia was 8,300-8,500 yuan/mt (50% metal content) today, down 50 yuan/mt (50% metal content) MoM from the previous trading day.

This week, spot prices for cobalt intermediate products maintained an upward trend. Supply side, customs data released on Monday showed that cobalt intermediate product imports rose slightly MoM in September, but as the increase remained relatively low compared to market demand, major miners and traders remained optimistic about the outlook and continued to suspend offers. Demand side, overall market changes were limited, with inquiries from downstream smelters gradually moving higher. However, constrained by suppliers' firm refusal to budge on prices, actual transactions remained sluggish, and the market continued to exhibit a "price without market" pattern. Given that domestic cobalt raw material supply is expected to remain structurally tight in the long term, cobalt intermediate product prices are projected to retain further upward momentum.

Refined cobalt prices experienced significant fluctuations this week, but from the actual supply-demand structure perspective, changes in market fundamentals were limited. Supply side, smelters continued to suspend quotations due to tight raw material inventory; although traders raised spot quotations following the futures market, trading activity remained sluggish as cobalt prices rose too rapidly early in the week. To promote actual transactions, some traders gradually adjusted their quotation benchmark from a slight premium to parity or even a slight discount. Demand side, downstream enterprises mainly engaged in just-in-time procurement, with no significant increase in overall trading volume. Regarding the price correction observed in the latter half of the week, aside from the impact of capital behavior, analysis suggests it was primarily driven by three factors: first, after the rise in refined cobalt prices, the profit margin for converting it back into cobalt salts narrowed, reducing smelters' purchase willingness; second, although overseas refined cobalt prices remained high, their capacity to absorb excessively high domestic prices was limited; third, the circulation of some low-priced, non-invoiced cargoes in the market exerted downward pressure on mainstream prices. Overall, following this round of price increases, the price spread between refined cobalt and cobalt salts widened once again. Given that refined cobalt can be used as a raw material for conversion back into cobalt salts, its price is expected to gradually converge toward the conversion cost line of cobalt salts to achieve a rationalization of the price spread.

Total building materials inventory decreased WoW, with total rebar inventory at 5.8586 million mt, down 2.70% WoW, and total wire rod inventory at 1.6565 million mt, down 0.42% WoW.

This week, prices of salt products such as cobalt sulphate and nickel sulphate continued to rise, while lithium carbonate prices also began to increase due to solid fundamentals, including strong demand. With the rise in cobalt salt prices, the black mass payables for ternary and LCO saw a slight increase. However, as the growth rate of cobalt prices slowed, the rise in discount coefficients for cobalt and lithium also gradually moderated. For LFP black mass, prices per % lithium rose this week in line with the increase in lithium chemical prices. Taking LFP pole piece black mass as an example, current prices stand at 2,700–2,900 yuan/mtu, up 75 yuan/mtu WoW. For ternary black mass, the nickel and cobalt payables currently range from 74% to 76%, flat WoW, while lithium payables increased to 70%–73% WoW. On the profit side, externally purchased LFP black mass used in lithium carbonate production continued to incur losses, with profit margins between -5% and 6%. Except for several newly commissioned LFP battery hydrometallurgy recycling plants this year, most LFP recycling enterprises have production lines capable of processing other raw materials to produce lithium carbonate. Therefore, even as lithium carbonate prices improved, many companies chose to halt procurement and production in the face of losses. The situation is similar in the ternary hydrometallurgy sector, where profits hover around 1%–3%. In the LCO hydrometallurgy segment, profit margins have recently declined to about 1%–3%, as sustained cobalt price increases drove up cobalt payables for upstream and downstream recycling companies. Supply side, following the price increases in nickel, cobalt, and lithium, upstream recyclers quickly raised prices for batteries and pole pieces, including LCO and LFP types, with black mass prices also rising to some extent. Most enterprises adopted a wait-and-see approach amid losses, and many LFP battery hydrometallurgy recycling plants maintained toll processing for Business clients.

In 2026, the nickel intermediate product market will face a situation where "demand growth lags behind supply growth." Additionally, the proportion of MHP directed toward refined nickel is expected to increase. The approval progress of Indonesia's RKAB policy remains a key variable, with attention on the costs of intermediate products and the release of downstream capacity.

[Boosted by LME Performance, SHFE Zinc Rose Significantly During the Day]: The most-traded SHFE zinc 2512 contract opened at 22,155 yuan/mt, fluctuated upward after opening, touched a low of 22,135 yuan/mt early in the session, reached a high of 22,345 yuan/mt toward the close, and finally settled at 22,345 yuan/mt, up 205 yuan/mt or 0.93%, with trading volume increasing to 90,105 lots.