SHANGHAI, Jul 29 (SMM) - China cobalt sulphate output stood at 35,600 mt in metal content in the first half of 2022, up 21% YoY, and a slight growth of 5% from the second half of 2021.

China cobalt chloride output was 21,700 mt in metal content in the first half of 2022, down 17% YoY, and 17% from the second half of 2021.

China cobalt sulphate output stood at 35,600 mt in metal content in the first half of 2022, up 21% YoY, and a slight growth of 5% from the second half of 2021. The top-tier cobalt sulphate factories mainly use cobalt intermediate products as raw materials. In the first half of the year, the cost of cobalt sulphate produced with intermediate product was significantly higher than the spot prices in the second quarter, hence the production enthusiasm was subdued. At the same time, with the rising popularity of lithium recycling, the production of cobalt sulphate by recyclers generally increased. The CR5 of the cobalt sulphate market is 48%, and the concentration rate is lower than the same period last year.

China cobalt chloride output was 21,700 mt in metal content in the first half of 2022, down 17% YoY, and 17% from the second half of 2021. Affected by the continuous increase in the price of Co3O4 in the first quarter, the profit of cobalt chloride was relatively good, and smelters generally ramped up the output of cobalt chloride. The electronics market uncounted the seasonal low in the second quarter, and the demand for Co3O4 weakened. Spreading COVID-19 pandemic during this period further weighed on the electronics market, and Co3O4 production slumped in the second quarter. Meanwhile, due to the high animation of the cobalt sulphate market in the first quarter, all manufacturers, except the mainstream manufacturers, switched to produce cobalt sulphate instead of cobalt chloride. The CR5 of the cobalt chloride market is 63%, and the concentration rate has enhanced compared with previous years.

Constantly rising prices in the first quarter boosted market sentiment, but the hidden dangers loomed

In January, the demand for materials showed explosive growth as car companies rushed to meet their sales targets. Due to the disturbance to the supply chain, the cobalt salt arrivals at ports were relatively tight. The prices of cobalt salt then rose more quickly amid supply tightness, and cobalt salt manufacturers ramped up the production in light of lucrative profits.

In February, during the Chinese New Year festival, the amount of intermediate products arriving at domestic ports declined. Most upstream smelters were shut down for maintenance, resulting in a decline in the output of cobalt salts. At the same time, the operating rates of downstream precursor manufacturers were relatively high even during the Chinese New Year, which, coupled with the restocking demand for the production after the Chinese New Year, pushed up cobalt salt prices again. 

In March, along with the rapid rise in domestic cobalt salt prices, overseas cobalt prices also started to rise, boosting the confidence of smelters. However, the "extreme nickel price" event in mid-March became a turning point in the cobalt salt market. Under the influence of extreme nickel prices, most precursor manufacturers adopted a wait-and-see attitude towards the purchase of cobalt salts, and the top-tier factories in Zhejiang suspended the production for half a month due to the pandemic. Therefore, the overall cobalt sulphate production in March was lower than expected.

Resurging pandemic became another major factor impacting the market following “extreme nickel price moves” in March, shadowing the cobalt market

In April, the pandemic broke out in many places in China, but considering that overseas prices were still rising, domestic prices fell only slightly in April. In addition, the delayed intermediate products arrived at ports in a concentrated manner, and the production of cobalt salts increased in April.

In May, the pandemic continued to deteriorate, and the downstream precursor plants reduced the production accordingly. In addition, as downstream manufacturers purchased actively at the beginning of the year, the purchase demand weakened at this point. The cobalt salt factories saw increasing accumulation of salt inventory. Recycling material smelters, out of bearish sentiment and cash flow considerations, sold cobalt salts at lower prices, and the prices of cobalt salts plunged in May. The cost of smelters using intermediate products as raw materials continued to increase, which even brought losses, hence the production enthusiasm of these smelters declined, resulting in a sharp decline in cobalt salt production in May.

In June, the pandemic situation in Shanghai eased, and the new energy market was promising as the car companies resumed the production intensively. Meanwhile, the prices of lithium carbonate rose again, reviving the recycling industry, and the production of cobalt salts by recyclers rose as well. The smelters using intermediate products as raw materials only maintained stable output due to serious inventory accumulation. Considering the continuous fluctuation of cobalt prices, integrated precursor manufacturers increased the in-house production of cobalt salts. Overall cobalt salt production increased in June.

The market share of China's top 5 cobalt sulphate producers in the first half of 2022 totals 48%, and Huayou, GEM and Tengyuan are still the top three market players. Due to the pandemic, the integrated precursor factories reduced the production in the second quarter, and the production of cobalt sulphate decreased as well, leading to lower concentration rate compared with the same period last year.

The combined market share of the top 5 cobalt chloride manufacturers is 63% in the first half of 2022. At the beginning of the year, the cobalt sulphate market was heated, and most small and medium-sized manufacturers focused on the production of cobalt sulphate, while large factories maintained normal production. Hence the concentration rate of cobalt chloride was further strengthened.