SHANGHAI, Mar. 2 (SMM) -- The launch of LME cobalt futures market which had been placed with great hope by investors didn't help to boost cobalt market, and few investors entered LME cobalt market to make transactions. In domestic cobalt market, cobalt prices were affected by market fundamentals, and oversupply of cobalt depressed cobalt prices. Transactions of domestic cobalt were sluggish, and prices gradually declined slightly.
Mainstream offers of cobalt from Jinchuan Group were at RMB 390,000/mt, and offers of cobalt from Zambia were in the RMB 370,000-375,000/mt range. Traded prices of cobalt ore (6%) were in the USD 13.3-13.5/lbs range, and offers of cobalt chloride were in the RMB 76,000-78,000/mt range. Mainstream traded prices of cobalt sulfate were at RMB 67,000/mt. Mainstream offers of tricobalt tretroxide were in the RMB 240,000-245,000/mt range, and offers of lithium cobalt oxide were around RMB 250,000/mt. Current prices lacked support and prices still faced risks to fall.
With regard to downstream demand from lithium battery industry, battery orders from major brand laptop and mobile phone producers from home and abroad remained stable from the Chinese New Year holiday, while orders from small unknown brand producers were few. In addition, producers in Guangdong, the major producing regions, faced with labor shortage, and production resumption at small battery producers met difficulties due to labor shortage and lack of orders. Weak demand is the major reason behind sluggish cobalt transactions, and also the major reason behind low cobalt prices.
With regard to supply, domestic producers mainly had raw material inventories that can be consumed for 3-6 months. Some producers began to feel cash flow pressure due to few orders and tighten credit and slow accounts receivable. Supply of ore from Africa was not as pessimistic as previous expectation, and a large amount of ore still flowed into Chinese market. With declining of ore prices, market insiders were more pessimistic. However, cobalt ore (6%) will get support at USD 13/lbs given its costs.
SMM believes that cobalt prices are affected by fundamentals at present, and are expected to fall in the near term. However, declining range will be limited due to support of costs. Recovery of cobalt market still lies in recovery of demand from downstream consumers.
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