Low inventories of feedstock likely to extend growth in cobalt prices 

SHANGHAI, Aug 15 (SMM) – Low inventories of cobalt intermediate products across smelters in China are likely to sustain the recent growth in cobalt prices, after speculative purchases on news about production halt at Glencore boosted the market. 

Most domestic cobalt smelters had failed to reach a deal under long term contracts since 2018, and mostly depleted their in-plant stocks of feedstock. 

SMM assessed that, during 2018 and the first half of 2019, some 15,000 mt of raw materials used to produce cobalt were consumed in stockpiles across smelters. The assessment was based on feedstock imports of 73,000 mt in 2018 and 36,000 mt in the first half of this year, and overall consumption of 124,000 mt. 

This could mean that there remained only about 5,000 mt of cobalt intermediate products inventories at those smelters by mid-2019, if assumed that they held 20,000 mt of stocks by the end of 2017, which was based on domestic raw materials imports and refined cobalt production in 2015-2017. 

SMM estimates that current monthly consumption of cobalt intermediate products in smelting stood at 7,500 mt, with an expected 8,100 mt in the high season of September-November. 

However, actual demand from the new energy sector may come below expectations as the sector is experiencing an adjustment period after national subsidy cuts. 

The recent price rally kept producers of cobalt intermediate products and refined cobalt withheld from offloading cargoes, which resulted in weak spot trades as of Wednesday August 14.

As of Thursday August 15, prices of refined cobalt increased to 237,000-247,000 yuan/mt, up 23,000 yuan/mt from late-July when prices bottomed out, SMM assessment showed. Prices of cobalt sulfate climbed some 5,500 yuan/mt during the same period, to 40,000-43,000 yuan/mt.