Raw materials imports pressured cobalt salt prices, high inventories weighed on lithium prices

SHANGHAI, Jun 30 (SMM) – 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. 

Lithium prices continued to trend downward amid inventory pressure of spodumene and lithium salts. Risk aversion prompted smelters to link the settlement prices of spodumene to lithium carbonate prices, and traded prices of Australian ore (grade 6%) below $400/mt cif occurred in the market last week. SMM expects lithium ore prices to continue to weaken in the weeks ahead. 

Prices of refined cobalt extended their slide in the week to June 30, decreasing 12,500 yuan/mt from last Monday to 230,000-245,000 yuan/mt, while prices of cobalt hydroxide held stable on the week at $9.8-10.3/lb, SMM assessed.

Overseas prices of refined cobalt fell steeply last week, triggering an outflow of capitals from the domestic market and weighing on domestic refined cobalt prices. Major suppliers in China have lowered offers but downstream consumers barely purchased given existing stockpiles and amid bearish prospects for prices. 

Forward cargoes of cobalt raw materials ordered by some plants started arriving at ports in late-June, but spot prices remained stabilised as trades were quiet in the spot market. However, the increased arrivals of raw materials from Africa are expected to depress spot prices of cobalt intermediate products this week. 

SMM assessed prices of battery-grade lithium carbonate 250 yuan/mt lower from a week ago, standing at 39,000-42,000 yuan/mt as of June 30, with prices of industrial-grade materials also dipping 250 yuan/mt during the same period to 31,500-37,000 yuan/mt.

Limited trades in the lithium carbonate market saw prices moving lower last week. Heavy inventory pressure facing most lithium carbonate smelters extended the selloff even as raw materials consumption from some refining plants grew and demand prospects for July improved. A lithium carbonate producer in Qinghai slightly raised quotes last week.

In the battery and end-users market, the July scheduled production at battery and car makers increased from that in June as producers turn their focus to building up inventories from destocking during March-May. Top battery mills have gradually restarted operation of their high-nickel line and are expected to reach full production in September. 

Personal purchases of new energy passenger vehicles in China increased from a year ago, and the trading market also revived from the fallout from the coronavirus pandemic. Demand from consumers will be further bolstered in the second half of the year with the launch of BYD’s Han EV and Tesla’s Model 3 equipped with LFP batteries. Demand from businesses will also improve with the economic recovery and the rollout of more stimulus measures from local governments.