[SMM analysis] Cobalt salt bibcock plant plans to reduce cobalt salt production, the price of cobalt salt may be limited.

SMM4, 26 March:

Upstream cobalt raw material and recovery end

1) South African President Ramafosa announced the lifting of the national "ban" on 1 May and the implementation of hierarchical early warning and control according to the level of risk. According to the risk of infection, there will be five levels of "risk early warning" prevention and control in different industries and different regions: the fifth level should take the strictest prevention and control measures; the fourth level can allow the resumption of some activities under highly cautious and strict prevention and control conditions; the third level can relax restrictions on work and social activities; The second level can further relax the restrictions on work and life, but must maintain the necessary physical distance, and maintain restrictions on some recreational and social activities; the first level can basically return to normal life under the condition of good hygiene and prevention and control. In order to make the prevention and control measures more accurate and more suitable, the national and regional prevention and control will be carried out according to different conditions. Prevention and control levels will be assessed and set according to local infection rates. In addition, risk assessments will be conducted in different industries, and cabinet ministers will give a detailed description of the risk assessments in each sector in the near future.

Ramafosa said that according to the decision of the National epidemic Prevention Command Council, South Africa will move the national risk level from the current level 5 to level 4 from May 1, allowing some activities to resume under the premise of extreme caution, including allowing some enterprises to resume business under specific conditions, and enterprises must formulate epidemic prevention and control regulations to protect their employees from infection. Enterprises to resume production and return to work must be promoted in stages, as far as possible to encourage employees to work at home, if you need to return to work, each batch of reworkers do not exceed 1/3.

SMM customer feedback, if the ship and scheduling is smooth, conservatively estimated that cobalt raw materials from the port of South Africa in mid-May, but the port is still relatively large, in view of the transport cycle, it is conservatively estimated that the domestic market will not receive new raw materials until mid-June. Although some cobalt smelters have sufficient cobalt raw materials, but the current cobalt salt prices are low, cobalt salt plants relatively cherish the sale, the offer is still strong. According to the feedback of a large cobalt salt plant, according to the latest production scheduling plan, it is expected to reduce the operating rate of some cobalt salts in May.

2) according to SMM, due to the low operating rate of downstream batteries, the new battery recovery materials are limited, the major traders of recent recycled materials are still high prices, and even high-priced recycled materials have begun to appear in the market. SMM customer feedback, the current recovery plant cobalt salt products inventory is small, if the low price cobalt recovery material is difficult to purchase, or do not sign new orders, reduce the May start-up rate.

To sum up, on the supply side, although the problem of "port closure" in South Africa has been temporarily alleviated, the situation is still more complicated. On the one hand, South African ports accumulate more goods and transport them inefficiently; on the other hand, the land transport of cobalt raw materials from Congo Kim to South African ports is still limited. The domestic cobalt salt price according to the metal grade calculation is still more than the electric cobalt, the cobalt salt enterprise profitability is damaged seriously, the production power is insufficient, according to the current research results, SMM expects the cobalt salt production to reduce about 2-4% in May. At present, the market low price cobalt salt is very few, basically high price does not ship the goods.

Downstream power and consumer demand end

1) in May, the decline in domestic power battery orders has become a fixed trend, and ternary material manufacturers are passively "accumulating". In addition to Tesla Shanghai plant continues to open up operating capacity, other car plant operating rate has not increased significantly, battery manufacturers also reduced orders. After the production of a large domestic battery manufacturer has been reduced, the orders of the ternary material manufacturers have been affected to varying degrees. According to SMM customer feedback, ternary materials production enterprises have been out of inventory before the Spring Festival began to increase again, May downstream orders will continue to decline, so manufacturers have also begun to reduce operating capacity. According to a preliminary survey, the three yuan precursor factory also has plans to reduce the start of construction in May.

2) domestic consumer orders fell in May. According to a large 3C battery manufacturer in China, the company's production plan in April was relatively stable compared with March, but market orders decreased in May, and the company's production scheduling plan is expected to follow suit. SMM expects domestic lithium cobalt manufacturers to drop their production plans by about 30 per cent in May compared with the previous month. The main large-scale cobalt oxide in China has varying degrees of production reduction plans in May, and the production reduction scale of each enterprise ranges from 20 to 50%.

To sum up, on the demand side, at present, downstream demand remains in the doldrums, power and consumer demand are expected to decline in May, and ternary precursors and cobalt oxide adopt varying degrees of production reduction plans. therefore, the demand for cobalt sulfate and cobalt chloride is expected to weaken accordingly.

In May, the operating pressure of cobalt salt plant was greater. On the one hand, the price of cobalt raw material was higher in the early stage, the new cobalt raw material was blocked, and the price of cobalt-containing recycled material was also higher. On the other hand, the basic March-April cobalt salt shipment is small, the enterprise capital pressure continues to bear pressure, the profitability is seriously damaged, the production power is insufficient, the leading cobalt salt plant plans to reduce production in May. According to the current research results, SMM expects cobalt salt production to be reduced by about 2-4% in May. At the same time, downstream power and consumer demand are expected to weaken by about 2-40%. SMM believes that in the short term, the bargaining power of cobalt salt is gradually transferred from the buyer to the seller, the market low price cobalt salt is very few, the basic price is not out of stock. In May, the basic and demand side of cobalt salt supply side decreased synchronously, and there were still some cumulative product stocks in the early stage, so there was still room for cobalt salt price to fall, but relatively limited. In the short term, the range of 0.2-4000 yuan / ton may exist, but cobalt sulfate falls below 40, 000 yuan / ton, cobalt chloride falls below 50, 000 yuan / ton, which is a small probability event for the time being.

SMM cobalt lithium new energy research team

Hu Yan 021-51666809

Qin Jingjing 021-51666828

Mei Wangqin 021-51666759

Huo Yuan 021-51666898

Wuyang 021-51666818