On November 2, the highly-anticipated Development Plan for the New Energy Vehicle Industry (2021-2035) was unveiled, which was not only a good news for the new energy vehicle (NEV) industry, but also a boost to cobalt demand.

China's installed capacity of batteries to power electric vehicles climbed 29.5% from a month ago to 3.6GWh in April, following a surge of 363.2% in the month of March, showed data from the China Automobile Power Battery Industry Innovation Alliance, suggesting the country’s EV sector continues to recover from the fallout caused by the coronavirus pandemic. 

Prices of ternary materials and precursors in China will see further downside risk before May as inventories continued to pile up, driven by slowed or delayed purchases by downstream producers of power batteries amid falling orders. 

Raw materials cost advantages and cash-in inclination drove some of the cobalt salt producers in China to reduce offers and destock last week, as more investors were on the sidelines given the fulfilment of pre-holiday orders and slow increase in new orders.  Sluggish demand in the downstream power battery market saw lithium salts consumers cautious about restocking, and demand from the industry sectors remained subdued. SMM expects limited upside momentum in near-term prices of lithium carbonate as lithium salts supply normalises in March and a smaller price spread between industrial- and battery- grade lithium carbonate squeezed the profit margins at refining plants.

China's imports of cobalt raw materials, including ore and intermediate products, came in at 8,000 mt in January, down 25% from December, showed the latest customs data. Imports in 2019 were 24%...

With the resumption of logistics and the return of workers, downstream production and its demand for upstream raw materials are expected to normalise in the first half of March.

Transactions increased in the cobalt and lithium chain last week as more producers returned from holidays. Downstream stockpiling on a bullish outlook for prices extended rises in cobalt salts, while

SMM expects pent-up demand from major consumers and low inventories at upstream producers to support the optimistic sentiment about cobalt salts prices.

SMM expects bullish sentiment about cobalt prices to sustain over a period of time after the CNY holiday

SMM expects cobalt prices to stay at low levels before the holiday, with little chance of recovery for lithium carbonate