Home / Metal News / Cobalt, lithium markets remained quiet as coronavirus delayed post-holiday recovery

Cobalt, lithium markets remained quiet as coronavirus delayed post-holiday recovery

iconFeb 10, 2020 15:55
The upward trend in overseas prices of refined cobalt will support bullish prospects for domestic prices

SHANGHAI, Feb 10 (SMM) – The coronavirus outbreak has delayed the resumption of most producers in the cobalt and lithium industry chain. Companies that continue operations over holidays may face a shortage of intermediate products and cobalt salts this month due to shipments restrictions to contain the virus. 

Inventories at lithium salt smelters built up as producers in Qinghai maintained normal production during the Chinese New Year holiday while subdued demand and transportation curbs affected delivery. Limited orders or quotes were seen in the new energy market in China last week. 

SMM expects the upward trend in overseas prices of refined cobalt will support bullish prospects for near-term prices in the domestic market. Cobalt prices in the first quarter will depend on the development of the virus and the release of pent-up downstream demand. 

Continued destocking will keep prices of lithium carbonate under downward pressure, while prices of lithium hydroxide see upward potential as suspension of large-scale producers tightened supplies. 

Major carmakers in China delayed their resumption after the CNY holiday till February 10, adding to pressure on China's new energy vehicle market. This, coupled with weakened demand from consumers, may impact NEV production and sales in the first half of the year. 

Battery producers in Tianjin returned from holidays last week, while most other battery plants planned to resume operations on February 10, a SMM survey found. 

Transportation curbs across most provinces and cities in China deterred the shipments from battery producers and their procurement of raw materials. 
The epidemic is likely to have a significant impact on the industry chain with falling sales at carmakers and delayed recovery of battery demand in February.  

In the week ended February 7, prices of refined cobalt and cobalt hydroxide remained unchanged from January 23 at 272,000-280,000 yuan/mt and $9.4-10.2/lb, respectively.

Overseas offers of refined cobalt continued to increase, but the impact of virus kept domestic prices from recovering with muted trades. Buyers of cobalt hydroxide reported lower inventories of cobalt intermediate products, likely due to the delayed delivery of raw materials amid virus outbreak. 

SMM assessed the average prices of cobalt sulphate at 50,000-53,000 yuan/mt last week, with prices of cobalt chloride at 60,000-63,000 yuan/mt and prices of battery-grade nickel sulphate at 24,500-25,000 yuan/mt, all unchanged from January 23. 
Enquiries for cobalt salts improved as the inventory stockpiled pre-holiday by downstream producers mostly depleted, but transactions were limited and made at high prices as upstream producers delayed their resumption. 

According to SMM assessments, prices of cobalt (II, III) oxide held flat at 185,000-195,000 yuan/mt last week. 
SMM expects downstream orders for cobalt (II, III) oxide will recover soon once the epidemic deescalate. 

For the week ended February 7, SMM assessed prices of ternary precursor NCM523 at 80,000-83,000 yuan/mt and prices of NCM622 at 86,000-89,000 yuan/mt, both unchanged from pre-holiday levels. 
Some major producers of ternary precursor operated at low rates during the CNY holiday. Downstream consumers, meanwhile, failed to return as of last week. SMM expects prices of ternary precursor to advance once downstream mills resume production and lift prices of cobalt salts. 

SMM assessed prices of both battery- and industrial- grade lithium carbonate stabilised on the week, standing at 47,000-50,500 yuan/mt and 37,000-40,000 yuan/mt, respectively.
Most lithium carbonate smelters have extended their holidays while smelters in Qinghai, Sichuan and Shandong operated as scheduled with little impact from the spread of the virus. Logistics issues kept lithium carbonate producers from providing offers. 

SMM assessed prices of battery-grade lithium hydroxide (coarse particle) were also flat on the week at 52,000-57,000 yuan/mt.
Supply of battery-grade lithium hydroxide showed signs of tightness as some large-scale producers halted operations recently. Recovery of small and medium-scale producers remained unclear. Downstream material producers are expected to resume procurement this week. 

Prices of lithium cobalt oxide (LCO), which is used to produce 4.35V batteries, stabilised at 195,000-215,000 yuan/mt, SMM assessed.
Post-holiday resumption of downstream battery plants was delayed by at least a week. Most LCO producers planned to return on February 10, with only a few plants reopening last week. 

SMM assessed prices of ternary material NCM523 and NCM622 remained unchanged on the week at 126,000-137,000 yuan/mt and 145,000-153,000 yuan/mt, respectively.
Producers of high-nickel ternary materials, except for those maintained operations over the CNY holiday, said they will resume working this week. The market saw no enquires or orders last week.

SMM assessments showed that prices of LFP used in power batteries flat on the week at 39,000-42,500 yuan/mt.
SMM learned that only a few large-scale LFP producers stroke deals with small volumes last week, and most plants remained shut. 

SMM assessed prices of lithium manganese oxide (LMO) used in high-energy-density lithium-ion batteries and prices of LMO used in power batteries remained unchanged on the week, at 22,000-31,000 yuan/mt and 34,500-36,500 yuan/mt, respectively.
Only a small number of LMO producers resume working last week, while a pickup in trades is forecasted this week. 


Coronavirus impact
Market Commentary
Cobalt lithium weekly review

For queries, please contact Michael Jiang at michaeljiang@smm.cn

For more information on how to access our research reports, please email service.en@smm.cn

Related news