Cobalt salt plants will report sharp decline in operating rates during CNY, raw material shortage may affect future production

A weekly update on the trending stories from the New Energy sector. 

Market rumours that China plans to stockpile 2,000 mt of cobalt continue to support the market, though the reserve volume has not been confirmed.

Continued tightness in supply of imported cobalt raw materials and slightly improved downstream demand still underpinned cobalt prices, but trades turned quiet after downstream users completed phased stockpiling.

Raw materials cost advantages and cash-in inclination drove some of the cobalt salt producers in China to reduce offers and destock last week, as more investors were on the sidelines given the fulfilment of pre-holiday orders and slow increase in new orders.  Sluggish demand in the downstream power battery market saw lithium salts consumers cautious about restocking, and demand from the industry sectors remained subdued. SMM expects limited upside momentum in near-term prices of lithium carbonate as lithium salts supply normalises in March and a smaller price spread between industrial- and battery- grade lithium carbonate squeezed the profit margins at refining plants.

China's imports of cobalt raw materials, including ore and intermediate products, came in at 8,000 mt in January, down 25% from December, showed the latest customs data. Imports in 2019 were 24%...

With the resumption of logistics and the return of workers, downstream production and its demand for upstream raw materials are expected to normalise in the first half of March.

Transactions increased in the cobalt and lithium chain last week as more producers returned from holidays. Downstream stockpiling on a bullish outlook for prices extended rises in cobalt salts, while

SMM expects pent-up demand from major consumers and low inventories at upstream producers to support the optimistic sentiment about cobalt salts prices.

SMM expects bullish sentiment about cobalt prices to sustain over a period of time after the CNY holiday

The increase slowed from a rise of 7.7% in the first nine months of the year