Cobalt salts prices rallied on downstream purchases, long-term lithium carbonate prices remain under pressure

SHANGHAI, Feb 17 (SMM) – SMM expects pent-up demand from major consumers and low inventories at upstream producers to support the optimistic sentiment about cobalt salts prices. But delayed recovery of overall demand in the first quarter due to the coronavirus outbreak will cap the increase in cobalt prices after major consumers finish stockpiling. 

Prices of lithium carbonate will remain under pressure in the long term amid destocking, and demand from high-nickel battery materials will determine near-term prices of lithium hydroxide.

Last week, the difference in the post-holiday resumption across the industry chain and the continued impact of logistics curbs lifted prices of most cobalt and lithium products. An increase in downstream purchases and bullish prospects bolstered prices of cobalt salts. While prices of lithium carbonate also rose last week, downstream consumers remained cautious about the price movement as the market will continue to destock. 

In the week ended February 14, prices of refined cobalt and cobalt hydroxide remained unchanged from a week ago at 272,000-280,000 yuan/mt and $9.4-10.2/lb, respectively.
Disrupted shipments depressed transactions of refined cobalt last week. Demand for cobalt hydroxide barely increased as consumers prepared sufficient stockpiles pre-holiday and postponed their post-holiday resumption. A few numbers of cobalt hydroxide buyers reported lower inventories of cobalt intermediate products, due to the delayed delivery of raw materials amid virus outbreak.

SMM assessed the average prices of cobalt sulphate at 54,000-56,500 yuan/mt last week, with prices of cobalt chloride at 63,000-68,000 yuan/mt, up 5,500 yuan/mt and 5,000 yuan/mt from a week ago, respectively. Prices of battery-grade nickel sulphate remained unchanged at 24,500-25,000 yuan/mt.
Cobalt salt producers held back cargos from the market amid bullish prospects for prices. About 30% of cobalt salts producers remained shut last week. Further recovery of logistics services and downstream demand will continue to boost transaction volumes and prices next week. 
According to SMM assessments, prices of cobalt (II, III) oxide gained 15000 yuan/mt on the week to 200,000-210,000 yuan/mt.

SMM assessed prices of ternary precursor NCM523 at 80,000-85,000 yuan/mt for the week ended February 14, up 1,000 yuan/mt from a week earlier, and prices of NCM622 held flat on the week at 86,000-89,000 yuan/mt.
Higher prices of cobalt salts accounted for the increase in prices of cobalt (II, III) oxide and ternary precursor. Trade volumes were limited last week as downstream factories had not fully resumed from holidays. The prices rally will likely continue next week with more consumers returning. 

SMM assessed prices of both battery- and industrial- grade lithium carbonate rose 250 yuan/mt on the week, standing at 47,500-50,500 yuan/mt and 37,000-40,500 yuan/mt, respectively.
Most lithium salt producers, except for producers in Qinghai, had yet to recover operations. Some will resume this week at the earliest after receiving approval from authorities. Enquiries from cathode material plants increased, but cargo shipments from major suppliers in Jiangxi remained restricted. This drove up prices of lithium carbonate last week, but the upside room in prices is limited. 

SMM assessed prices of battery-grade lithium hydroxide (coarse particle) climbed 500 yuan/mt on the week to 52,000-58,000 yuan/mt.
Major producers of lithium hydroxide in Jiangxi were compelled to halt production at the start of February on COVID-19 impact, while demand emerged from downstream high-nickel cathode materials producers that maintained production over the holidays. This resulted in relatively tight supply and lifted lithium hydroxide prices. 

Prices of lithium cobalt oxide (LCO), which is used to produce 4.35V batteries, stabilised at 195,000-215,000 yuan/mt, SMM assessed.
Prices of ternary material NCM523 and NCM622 also remained unchanged on the week at 126,000-137,000 yuan/mt and 145,000-153,000 yuan/mt, respectively.
Only a handful of battery major producers resumed production last week, which failed to significant boost demand for battery materials. Any upward potential in prices will remain limited next week. 

SMM assessments showed that prices of LFP used in power batteries flat on the week at 39,000-42,500 yuan/mt. 
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.
Producers of LFP and LMO mostly recovered at a slow pace. This, coupled with muted trades on logistics curbs, held prices flat on the week.