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"Cobalt Granny" performance decline Mechanism: cobalt Price Down Space narrow 2020 is expected to be both prosperous in supply and demand
Apr 1,2020 11:54CST
The content below was translated by Tencent automatically for reference.

SMM news: as of today, the main domestic cobalt products production enterprises have disclosed the results.

According to the 2019 annual report of Hanrui Cobalt Industry, during the reporting period, the company realized 1.779 billion yuan in operating income, down 36.06 percent from the same period last year, and realized the net profit belonging to the owner of the parent company, which was 13.87 million yuan, down 98.04 percent from the same period last year.

Huayu cobalt industry annual report, achieved operating income of 18.853 billion yuan, up 22.07% from the same period last year, and the net profit attributed to shareholders of listed companies was 120 million yuan, down 92.18% from the same period last year.

Luoyang molybdenum industry disclosed that the company's revenue in 2019 was 68.677 billion yuan, up 164.52% from the same period last year, and the net profit was 1.857 billion yuan, down 59.94% from the same period last year. Luoyang Molybdenum expects cobalt prices to fluctuate between $16 and $18 a pound in 2020.

Huajin Securities believes that due to the low price of cobalt for the whole of 2019, the average price of cobalt in MB is 56% lower than in 2018, resulting in a mismatch between sales growth and profit growth of cobalt products; considering that cobalt prices are at historic lows, cobalt prices are expected to rebound in the long run.

Caitong Securities suggested that attention be paid to the reduction in production of high-cost cobalt mines and the export of cobalt mines in the Democratic Republic of the Congo. The current cobalt price is the same as the mining cost of high-cost mines in the Congo region. If other costs such as financing are taken into account, high-cost cobalt mines may have lost money, and subsequent production may be gradually reduced and shut down, thus supporting cobalt prices.

Anxin Securities said that from the perspective of the next three years, Mutanda mining production, DRC mining production has been significantly reduced, most of Glencore production has been locked in the downstream long single, the spot market is expected to remain tight.

Yesterday, Shengtun Mining announced that in order to further increase the control of upstream resources and enhance the company's copper and cobalt business scale and overall profitability, the company intends to invest in the construction and development of Calonway Mine, with a total investment of US $293 million. The full investment payback period of the project (including the construction period) is 5.51 years.

Tianfeng Securities also mentioned that the recent spread of overseas outbreaks, Congo Kim, South Africa and other places cobalt supply chain may be affected by closed policy transport. Consumer electronics are expected to be the first to release for cobalt in the near future. It is suggested that we should pay attention to the progress of overseas epidemic situation and domestic policy stimulus.

This year's Q3, new energy vehicles are expected to gradually repair. With the subsequent downstream resumption and logistics repair, the replenishment of cobalt prices is expected to continue to rise. In the long run, the marginal improvement of cobalt demand appears, and the faucet is expected to fully benefit from the optimization of supply structure. Recommended to pay attention to cobalt industry leaders: Huayu cobalt industry, cold sharp cobalt industry.

Anxin Securities expects a sharp decline in cobalt prices against the backdrop of weak supply and demand. Once the epidemic is over, both supply and demand of cobalt are expected to drive up the price of cobalt market.

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