Prices of cobalt products are expected to continue to moderate in the near term with the arrival of seaborne cobalt raw materials and the continued weak demand for cobalt sulphate.

Prices of cobalt are expected to further retreat this week as the arrival of cheap cobalt raw materials impacts the domestic spot market and grow cobalt salt producers inclination to destock. 

Prices of refined cobalt and cobalt intermediate products in China edged lower last week. Some domestic cobalt suppliers cut output due to shortage of raw materials, but some producers held production of refined cobalt at high levels as refined cobalt prices outperformed that of cobalt salts. 

Trades in the cobalt market remained muted as concerns about tight raw materials supply have faded. Cobalt prices may again retreat with the arrival of seaborne cobalt raw materials at end-June. 

Prices of cobalt rebounded last week, but the possibility of a sustained price rally is limited given the continued weakness in the new energy vehicle (NEV) market. Spot cobalt transactions were light last week as large-scale producers of high-temperature alloy and magnetic materials had sufficient stockpiles of cobalt raw materials. 

Prices of Chinese cobalt products may slow their downside trend in the short term as uncertainties around raw materials imports remain even as top supplier South Africa has eased coronavirus lockdown measures to level 4 which allowed freight transport to resume. 

Copper scrap supply in China is estimated to have shrunk nearly 200,000 mt in the first three months of 2020, as escalated virus-control measures disrupted global trade flows and as Chinese suppliers held back on sales following a slump in copper prices. A total of 225,083 mt of copper scrap was imported to China in January-to-March, down close to 140,000 mt, or more than 38% from the same period last year, according to data from China customs. SMM estimates that those copper scrap imports, with average Cu content of 78.49%, contained 176,676 mt of copper, down more than 37% from the quarter ended March 2019.

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. 

Demand remained subdued in China’s cobalt market last week while a handful of consumers purchased as required. The market may find some near-term support from the extended national lockdown of South Africa, which will last until end April and aim to curb the COVID-19 pandemic.  

Inventory pressure of lithium carbonate, a raw material for digital and power batteries, may continue to mount in April as Chinese lithium salt producers have not yet planned to wind down production. Elevated inventories together with limited downsides in lithium carbonate prices with support from costs, however, may trigger output cut in the second quarter.