[SMM Cobalt Morning Meeting Summary] Refined cobalt market weakens, significant volatility expected during the week

Refined Cobalt:

Recently, refined cobalt prices have been declining. In terms of supply, smelters continue to cut production and are still in the process of destocking. At the quotation level, traders' quotations have slightly decreased in line with the futures market. On the demand side, although downstream enterprises continue to purchase as needed, the overall buying sentiment has improved slightly, with inquiries and purchases increasing marginally. It is expected that this week, as the position rolling ends, the refined cobalt futures market may continue to fluctuate.

Intermediate Products:

Recently, cobalt intermediate product prices have remained stable. The available goods in the market are still mainly from traders, and quotations remain flat. On the demand side, despite the decline in cobalt product prices, cobalt intermediate product prices have held steady. Current quotations are slightly higher than the psychological transaction prices expected by downstream enterprises, resulting in poor purchase activity from downstream enterprises. Currently, a wait-and-see attitude prevails, and it is expected that cobalt intermediate products may weaken slightly this week.

Cobalt Sulphate:

This week, spot prices of cobalt sulphate have continued to decline. In terms of supply, spot quotations for cobalt sulphate from both smelters and recycling plants have decreased, with some low-priced spot orders being concluded, but there is still no significant volume purchasing. On the demand side, the overall purchasing sentiment of downstream enterprises remains weak, with overall stockpiling demand not strong. Additionally, as Co3O4 manufacturers have built up inventories in the early stage, Co3O4 sales have slowed down slightly in the short term, leading to a further decline in manufacturers' purchase willingness. It is expected that spot prices of cobalt sulphate may continue to weaken this week.

Cobalt Chloride:

At the beginning of this week, cobalt chloride prices decreased slightly. In terms of supply, prices from major smelters have remained firm, with almost no cases of low-priced selling. However, some smelters have shown slight divergence in their attitudes, with a stronger willingness to sell, leading to a small number of low-priced transactions and thus pulling down spot market prices. On the demand side, downstream enterprises mostly adopt a wait-and-see attitude, mainly engaging in just-in-time procurement, and market sentiment remains sluggish. However, due to the ongoing shortage of raw materials, market bullish sentiment remains high, and it is expected that cobalt chloride spot prices will continue to fluctuate at high levels.

Cobalt Salt (Co3O4):

At the beginning of this week, Co3O4 prices dropped slightly. In terms of supply, although smelters' quotations have remained relatively stable, their willingness to sell has increased, and the situation of holding back from selling has decreased. On the demand side, downstream LCO cathode manufacturers maintain a strong wait-and-see attitude, with many orders already completed in early procurement, leading to inventory accumulation and a lower willingness to stockpile. Therefore, this week, the market will mainly focus on executing existing orders, with an overall sluggish trading atmosphere. However, due to the still high prices of raw cobalt salts, the spot prices of Co3O4 are expected to remain at high levels, with limited room for decline.

Cobalt Powder and Others:

This week, the cobalt powder market has continued to maintain a stable development trend, with quotations from various enterprises remaining basically stable and showing no significant changes. Price adjustments have not significantly promoted new orders. The demand from the downstream alloy industry remains stable, but due to the rising prices of tungsten carbide and its high proportion in costs, alloy manufacturing enterprises are more focused on the price dynamics of tungsten and relatively less on cobalt powder. Therefore, cobalt powder prices currently show a trend of stabilizing.

Ternary Cathode Precursor:

On Monday, prices of 5-series, 6-series, and 8-series products in the ternary cathode precursor market all declined slightly. In terms of raw material costs, nickel sulphate and manganese sulphate prices have remained stable, while cobalt sulphate prices have decreased slightly. On the demand side, the overall performance of the large NEV precursor market has been relatively mediocre, with some order transfers occurring among manufacturers, but no significant increase in overall demand. Recently, orders for small power and consumer precursors have increased, but due to the relatively small size of the consumer market, the demand boost for the entire market is limited. Additionally, some downstream ternary cathode material manufacturers currently have sufficient finished product inventories of precursors and are in the destocking phase, with no urgent stockpiling needs, resulting in a relatively sluggish trading sentiment recently. In terms of prices, due to weak end-use demand, it is difficult to increase the discount coefficients of current ternary cathode precursors. As month-end approaches, cathode material manufacturers enter the traditional stockpiling cycle, and market trading sentiment is expected to turn positive this week.

Ternary Cathode Material:

On Monday, ternary cathode material prices continued to decline. In terms of raw material costs, nickel sulphate and manganese sulphate prices have remained stable, while cobalt sulphate prices have decreased slightly, and lithium chemical prices still show a relatively significant downward trend. On the demand side, the large NEV market has seen some recovery, with sales of some car models performing well, and some models preparing for upcoming launches, providing certain support for ternary cathode material demand, but the overall volume remains relatively limited. The consumer and small power markets have seen more orders recently, especially with good overseas market demand, but due to the relatively small size of the consumer market, the overall increase is not significant. Recently, market trading sentiment has been weak, mainly focusing on just-in-time stockpiling. Currently, demand in June also appears relatively mediocre. In terms of price trends, it is expected that nickel sulphate prices will remain firm in the future, but lithium chemicals still have downside room. Affected by fluctuations in raw material prices, ternary cathode material prices may further decline.

LCO Cathode:

The LCO cathode market has been under pressure and declining this week. Mainstream quotations for 4.2V/4.4V/4.5V products have fallen to 215,000 yuan/mt, 220,000 yuan/mt, and 231,000 yuan/mt, respectively. Price adjustments are mainly due to dual pressures from the raw material side: battery-grade lithium carbonate continues to decline, and Co3O4 prices have slightly loosened due to weak purchasing sentiment. On the supply side, top-tier enterprises maintain high production levels through capacity releases. On the demand side, as terminal manufacturers prepare for the "618" sales promotions, battery cell manufacturers' procurement demand has increased temporarily. It is worth noting that uncertainties in cobalt raw material supply due to changes in mining policies in the DRC continue to affect the shipping strategies of LCO cathode manufacturers, and market shipments remain cautious.

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SMM New Energy Research Team

Wang Cong 021-51666838

Ma Rui 021-51595780

Lin Ziya 86-2151666902

Feng Disheng 021-51666714

Lv Yanlin 021-20707875

Zhou Zhicheng 021-51666711

Wang Zihan 021-51666914

Wang Jie 021-51595902

Zhang Haohan 021-51666752

Chen Bolin 021-51666836

Xu Mengqi 021-20707868