Cobalt Sulphate Prices Hit 3-Year High amid Production Stagnation on COVID

SHANGHAI, Dec 29 (SMM) - The rapid rise in the prices of cobalt and lithium recently has shocked the industry, and the prices of cobalt and lithium salt rose as well. Taking cobalt sulphate as an example, although its performance was slightly inferior to that of lithium carbonate, which has seen a daily price hike of over 3,000 yuan/mt, cobalt sulphate was once the definite focus of the market on December 14.

At that time, stimulated by the news that a ternary material and precursor enterprise and two cobalt salt enterprises in Zhejiang officially ceased production on December 10, the prices of cobalt sulphate jumped 4,000 yuan/mt in a single day.

However, recently, the Disease Control Bureau of the National Health Commission held a press conference and said that the COVID pandemic in Shaoxing, Ningbo and Hangzhou in Zhejiang province has been brought under control. SMM also learned from recent research that with the lifting of the pandemic alert, the three companies in Zhejiang that have been shut down previously resumed the production on Monday this week.

The production suspension due to the COVID pandemic this time has greatly affected the market of cobalt salt, according to SMM research. In December, cobalt sulphate and cobalt chloride output was reduced by 350 mt and 600 mt respectively, accounting for 6% and 6.5% of the industry's total monthly supply.

The production suspension in Zhejiang coincided with the overseas price hike of cobalt. At the same time, as the end of the year approached, the downstream terminals were rushing to polish up their annual performance, hence the supply dropped while the demand increased. A combination of factors pushed up the raw material costs of cobalt salt enterprises, which once triggered panic in the market and led to bullishness on cobalt salt prices.

Cobalt sulphate prices jumped by 4,000 yuan/mt as of December 14, with the average price rising from 95,000 yuan/mt to 99,000 yuan/mt; while cobalt chloride prices rose by 7,000 yuan/mt. SMM expects that cobalt sulphate and cobalt chloride prices will remain stable at a high level.

As of December 29, the average spot price of cobalt sulphate recorded 102,000 yuan/mt, up 1,000 yuan/mt in a single day, setting a new record high since nearly three years ago.

Regarding the future market direction of cobalt prices, Guoxin Securities commented that cobalt prices are expected to maintain a high level. At present, the global cobalt ore supply is expected to keep rising steadily, and the electrification in the global automobile sector will still drive the cobalt demand to grow rapidly. Hence cobalt supply and demand are expected to maintain a tight balance. On the other hand, the global cobalt supply chain is relatively fragile, and the recurrence of the pandemic in Africa and the instability of the political environment may have an impact on cobalt supply.