[SMM Analysis] Cobalt Raw material tension superposition smelter plans to reduce the price of cobalt oxide can be adjusted in the short term?

SMM, 29 April:

Today, SMM Cobalt oxide quoted 17-175000 yuan / ton, the average price is stable compared with the previous day. May Day holiday is coming, downstream lithium cobalt acid manufacturers to replenish the stock of raw materials. Although the raw material inventory of cobalt smelter is tight, smelter is strong to offer cobalt oxide, but the order of digital battery is weak, and the demand is lower than the purchase price of cobalt oxide. Given that downstream demanders still have some stocks of raw materials available, SMM believes that cobalt oxide prices will not recover after the May Day holiday.

From the raw material end, South Africa will begin to open up port transport on May 1, the current South African port raw material inventory holders for Glencore, Shengtun Mining and other large enterprises. Due to giving priority to manganese, chromium, iron ore and other exports, cobalt exports are expected to begin in mid-May, coupled with at least a month of transport cycle, domestic enterprises can receive raw materials as early as mid-June.

Imports of cobalt raw materials rose 43 per cent to about 8500 metal tons in March from a year earlier, according to Chinese customs data. Most of the raw materials in March were ordered at the beginning of the first quarter, and the Spring Festival holiday has been taken into account. Exports of cobalt mines in South Africa's closed port were tight at the end of March, and cobalt imports are expected to fall month-on-month in April and sharply in May. Some terminal enterprises, such as ATL, still have some raw materials in stock, and the raw materials of smelters are expected to be supported only until the middle and first ten days of June. Some enterprises strictly control the operating rate to ensure post-production.

On the demand side, 3C digital market demand fell more slowly than orders for power batteries and cars, and major lithium cobalt producers said orders did not fall sharply in May. A major 3C battery factory revealed that the decline in downstream orders in May was mainly due to the cancellation of orders transferred by some small battery manufacturers because of the epidemic, which had little impact on the overall order and operating rate of the company.

To sum up, SMM believes that in the short term, cobalt oxide producers reduce production in order to ensure that the raw materials needed for later production, and there is no increase in downstream demand, the existing supply can meet the downstream demand, so the price of cobalt oxide is difficult to recover in the short term. However, there is likely to be a shortage of raw materials for producers after the end of May, and SMM will continue to pay attention to the import of cobalt raw materials.

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