SHANGHAI, Aug 10 (SMM) - Boosted by rumours that the National Food and Strategic Reserves Administration would stockpile cobalt metal, the price of refined cobalt rose rapidly on the afternoon of August 8, with an increase of 11.88% that day.

The domestic cobalt metal futures market is relatively small, making it highly sensitive to the influence of emotions. The market should pay focus more on fundamentals.

The rumours encouraged many traders to raise their quotations yesterday. The SMM spot refined cobalt prices rose by 10,000 yuan/mt to 320,000-330,000 yuan/mt following continuous decline.

So what about the domestic fundamentals? According to SMM's survey, as the current profit of refined cobalt is better than that of lithium salt, the output of the former continues to rise, leaving supply in a surplus. On the demand side, the performance of the downstream market is still weak. Export orders of alloy plants declined, which led to reduction in raw material purchases. 

Overseas cobalt prices kept falling due to poor demand in the summer break, which affected sentiment in the domestic market.  Under the influence of the above-mentioned factors, the price of refined cobalt was a downward trend before the latest rumour sent its prices soaring.

SMM estimates that cobalt raw materials will be in short supply in 2022, but will shift to a surplus in 2023 and the oversupply situation will intensify year by year in the years leading up to 2025.