SHANGHAI, Jun 10 (SMM) – 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.
In the lithium market, prices of battery-grade lithium carbonate have touched the bottom levels of around 42,000 yuan/mt, SMM assessed based on costs of spodumene concentrate. However, there remain possibilities that cash-in demand prompts smelters to destock at lower prices, as upstream producers have not scaled back operations and end-users demand from power batteries have not increased markedly. Supply and demand fundamentals of battery-grade lithium carbonate remained weaker than that of industrial-grade materials.
As prices of industrial-grade lithium carbonate extracted from salt lake brine stayed at low levels, processors that use such materials to produce battery-grade lithium carbonate continued to see profits. This could suggest some downward pressure on battery-grade lithium carbonate prices. SMM expects prices of battery-grade lithium carbonate to fall further in Q3.
SMM assessments showed that prices of refined cobalt held flat for over two weeks at 248,000-258,000 yuan/mt as of June 10, with prices of cobalt hydroxide also unchanged on the week at $9.8-10.4/lb amid light trades.
Domestic cobalt prices were stable last week. While some refined cobalt producers raised ex-work quotes before their upcoming maintenance and other cobalt plants also firmed up offers, subdued downstream purchases kept the traded prices flat from a week ago. A very small amount of trades occurred in the overseas market amid poor downstream orders.
Spot prices of cobalt intermediate products at ports remained elevated, but the purchase willingness from smelters declined given insufficient orders from the power battery market. Prices of cobalt salts began to face some downward pressure as greater amounts of cheap raw materials from Africa will arrive after mid-June.
SMM assessed prices of battery-grade lithium carbonate 750 yuan/mt lower from early June, standing at 41,000-43,500 yuan/mt as of June 10, with prices of industrial-grade materials falling 250 yuan/mt during the same period to 33,000-38,000 yuan/mt.
Amid sluggish trades in the lithium carbonate market, some sellers actively seek negotiations for long-term contracts. Low operating rates at ternary materials producers slowed the resumption of demand, and this account for the muted trades of battery-grade lithium carbonate. Some smelters have conducted technical reformation for production lines, in order to increase the production proportion of battery-grade lithium carbonate and make preparation for expanding capacity and lowering costs.
In the power battery market, Chinese electric vehicle startup Nio sold 3,436 EVs in May, up 215.5% from a year ago and up 8.9% from a month earlier. SMM expects domestic production and sales of new energy vehicles (NEVs) to rise on the month in May as most power battery makers reported significant increases in the capacity of batteries installed on NEVs in May.
In the overseas markets, Germany and France have increased incentives for the EV market, a move aimed at boosting consumption to offset the fallout from the coronavirus crisis. EV sales in the European countries in Q1 posted significant increases from a year ago and the sales in some countries also showed signs of picking up in May, adding to optimistic prospects for the EV market this year. At the same time, more European carmakers have sought cooperation with Chinese battery producers, and this may bolster domestic production of power batteries this year.
