I. Price Aspect:
According to the SMM official website, the average of low-end prices for Co3O4 in 2024 is 122,300 yuan/mt, and the average of high-end prices is 125,100 yuan/mt.
Throughout 2024, the cobalt salt market largely remained at a low level, with demand recovery falling short of expectations. Downstream industries primarily focused on medium- and high-nickel products, resulting in limited cobalt consumption, which somewhat restricted the development of the ternary market and led to a significant decline in market prices. The continuous drop in cobalt salt prices weakened the cost support for Co3O4, causing spot prices to decline accordingly. Additionally, due to the high concentration of demand for LCO in downstream industries and intense competition within the sector, some Co3O4 enterprises reduced prices to secure transactions, further depressing spot prices. With weakened cost support, Co3O4 spot prices dropped significantly, profit margins continued to shrink, and the industry faced losses.
II. Supply and Demand Aspect:
Supply side, in 2024, the growth rate of Co3O4 supply in China was notable. In Q1, driven by low cobalt prices and stockpiling demand before the Chinese New Year, market purchase willingness increased, leading to a rise in Co3O4 orders and a significant boost in smelter production. Although some small and medium-sized enterprises conducted brief maintenance during the Chinese New Year, demand from large enterprises remained stable, keeping overall production at a high level. In Q2, the operating rates of major Co3O4 smelters were favorable, with a high market concentration, primarily fulfilling early orders. While competition in the conventional product market was intense, demand for high-voltage products remained stable, and supply was sufficient. In Q3, LCO producers showed stronger stockpiling willingness, and the market was stimulated by Huawei's new devices, leading to increased demand for Co3O4. Major smelters maintained high operating rates, and producers resumed production after maintenance, resulting in overall supply growth. In Q4, LCO demand is expected to become mediocre, with weakened purchase willingness, and production schedules of enterprises may decrease. For the whole year, the growth of the LCO market drove the increase in Co3O4 production.
Demand side, in 2024, the high market enthusiasm for Huawei's new smartphone models in H2 2023 led to similar expectations for new smartphone models in 2024. Coupled with the upgrading of devices such as smartphones, tablets, and computers, the consumer market is expected to grow by over 10% throughout 2024, translating into a YoY increase in demand for Co3O4 in the raw material sector.
III. Future Outlook:
In 2025, as some capacities did not reach full production as expected in 2024, they are anticipated to ramp up in 2025, leading to sustained production growth. In 2026, after the end-user market undergoes the upgrade cycle for smartphones, tablets, and computers, demand may decline. Post-2026, supported by the stable development of the consumer market, market demand is expected to remain secure. However, due to the high customization requirements for certain Co3O4 models, the market is likely to maintain a produce-based-on-sales pattern. To prevent unexpected situations where downstream customers pick up goods in advance, Co3O4 enterprises are expected to maintain half a month's inventory and schedule production based on downstream orders. The consumer electronics sector still holds certain growth prospects, and aside from the slight decline in demand after the digital upgrade cycle, the overall demand pattern is expected to remain relatively stable.
SMM New Energy Research Team
Cong Wang 021-51666838
Rui Ma 021-51595780
Disheng Feng 021-51666714
Ying Xu 021-51666707
Yanlin Lü 021-20707875
Yujun Liu 021-20707895
Xiaodan Yu 021-20707870
Zhicheng Zhou 021-51666711
