[SMM Cobalt Morning Meeting Summary] DRC's Ban Intensifies, Refined Cobalt Prices Rise but Transactions Sluggish amid Strong Wait-and-See Sentiment

Refined Cobalt:

On Monday, influenced by the three-month extension of the export ban in the DRC, both futures and spot prices of refined cobalt saw significant increases. In terms of supply, refined cobalt smelters continued to supply under long-term contracts, with fewer spot quotes. Traders mainly adopted a wait-and-see attitude, and a small number of quoting enterprises maintained their prices. On the demand side, influenced by policies, inquiries from traders and downstream end-users increased today. However, downstream buyers remained cautious in purchasing, resulting in few actual transactions in the market. Overall, today was the first trading day after the ban was announced, with most enterprises still in a wait-and-see mode, awaiting clearer market trends.

Intermediate Products:

Today is the first trading day after the DRC ban, and cobalt intermediate product enterprises have suspended quoting. In terms of supply, mines and traders maintained a wait-and-see attitude, holding onto their stocks. On the demand side, downstream smelters had relatively sufficient inventory and continued to deplete their stocks, temporarily halting procurement until market trends became clearer. Overall, although enterprises have currently suspended inquiries and quoting, market sentiment remains strongly bullish, with most enterprises expecting a significant increase in intermediate product prices.

Cobalt Sulphate:

On Monday, influenced by the DRC policy, cobalt sulphate prices stopped falling and rebounded. In terms of supply, most smelters suspended quoting to observe the market, with a small number of quoting enterprises maintaining their prices around 49,000-50,000 yuan/mt. On the demand side, orders from downstream ternary cathode enterprises have not shown significant improvement, and they are temporarily observing the market, mainly digesting previous inventory. Refined cobalt procurement remains suspended due to its poor economic viability. Overall, market sentiment in the cobalt sulphate market has significantly improved, with specific price trends needing to refer to subsequent actual transaction prices and downstream demand.

Cobalt Chloride:

Currently, cobalt chloride enterprises have no quotes, and the market is in a wait-and-see mode with no transactions. On June 21st, the DRC announced a new policy to extend the cobalt export ban by three months. Influenced by this policy, in terms of supply, smelters chose to suspend quoting and shipments, mainly observing market sentiment. On the demand side, downstream enterprises had relatively sufficient inventory levels, with active market inquiries but a wait-and-see attitude towards price trends. Regarding prices, although upstream smelters have suspended quoting, their preliminary price expectations are generally around 60,000 yuan/mt, with a long-term bullish outlook. Optimistic expectations suggest prices could potentially exceed 70,000 yuan/mt. However, given the current strong market sentiment, specific price trends need to refer to subsequent actual transaction prices and inventory levels of both upstream and downstream enterprises.

Cobalt Salt (Co3O4):

Currently, Co3O4 enterprises have suspended quoting and shipments, with both upstream and downstream adopting a wait-and-see attitude and no transactions occurring. Influenced by the DRC policy, in terms of supply, Co3O4 plants chose to suspend quoting to observe overall market sentiment and demand. On the demand side, LCO cathode plants had relatively less inventory but, influenced by overall market sentiment today, chose to wait and see. However, procurement is expected to occur soon. Regarding prices, there are currently no quotes in the market. According to downstream sources, upstream enterprises may choose to ship at 210,000 yuan/mt, but specific price trends and changes need to be judged when actual transactions occur. In the long term, Co3O4 prices are still influenced by cobalt inventory levels. Whether current industry inventory can support until December is a key factor affecting price trends.

Cobalt Powder and Others:

This week, the cobalt powder market saw a slight drop. Cobalt powder enterprises are paying attention to the impact of policy changes on cobalt raw materials on the market. Currently, cobalt powder supply remains sufficient, with room for transaction prices. The price of raw material cobalt carbonate has also declined, with cost and demand support falling short of expectations. In the short term, the cobalt powder market may continue to maintain a weak and volatile trend, with prices unlikely to fluctuate significantly.

Ternary Cathode Precursor:

On Monday, prices of 5-series, 6-series, and 8-series products in the ternary cathode precursor market bottomed out and rebounded, mainly influenced by the latest DRC cobalt export policy announced over the weekend. This policy announced a three-month extension of the cobalt export ban, driving cobalt sulphate prices into an upward phase. Currently, quotes in the ternary cathode precursor market have not shown significant fluctuations, with the overall market maintaining a wait-and-see attitude, awaiting further developments in upstream raw material transactions. However, it is expected that the discount coefficient for cobalt sulphate used in settlements between ternary cathode precursor enterprises and downstream cathode material plants will increase. Nickel sulphate prices have temporarily stabilized, but influenced by macro factors such as the situation in the Middle East, there is an expectation of an increase in upstream raw material prices, and nickel sulphate prices are expected to remain firm. Manganese sulphate prices remain relatively stable. The overall performance of the ternary cathode precursor market in June was weak, with no significant growth in NEV market demand and the small power market entering the off-season. Considering the current situation, it is expected that market performance in July will still be relatively sluggish. Regarding prices, it is expected that ternary cathode precursor prices will rise with the increase in raw material prices.

Ternary Cathode Material:

On Monday, ternary cathode material prices rebounded. In terms of raw material costs, nickel sulphate and manganese sulphate prices have temporarily stabilized, while lithium carbonate and lithium hydroxide prices continue to decline. Over the weekend, the DRC announced the latest cobalt export policy, extending the export ban by three months. Unlike the market's main sentiment-driven speculation when the cobalt export ban was first announced at the end of February this year, domestic cobalt inventory in the third quarter has significantly decreased compared to the second quarter, and the market may have sufficient expectations for an increase in cobalt sulphate prices. The strong increase in cobalt sulphate prices is expected to offset the inhibitory effect of declining lithium chemical prices on ternary cathode material prices, driving an overall rebound in ternary cathode material prices. In addition, the discount coefficient for cobalt sulphate used in transactions between ternary cathode material enterprises and downstream battery cell manufacturers is also expected to increase. However, currently, market quotes for ternary cathode material products have not shown significant changes, with downstream cathode material enterprises generally adopting a wait-and-see attitude, awaiting further developments in the upstream market. On the demand side, the overall performance of the ternary cathode material market in June was mediocre, with no significant increase in NEV market demand entering July, and the small power market entering a downward phase. The continuous increase in cobalt sulphate prices is expected to be beneficial to the demand for medium-to-high nickel 6-series ternary cathode materials, while orders for 5-series products may continue to shrink.

LCO Cathode:

Today, LCO cathode enterprises have suspended quoting and shipments. Price adjustments for LCO cathode are mainly driven by changes in raw material costs: recently, battery-grade lithium carbonate prices have continued to decline, while Co3O4 prices have shown strong upward sentiment influenced by the DRC policy. In terms of supply, Co3O4 enterprises have chosen to suspend quoting and shipments. On the demand side, terminal battery cell manufacturers currently still have sufficient inventory, but their acceptance of prices needs to consider whether raw material costs can be passed on to the terminal. Overall, LCO cathode prices are expected to see significant increases in the short term, with the specific magnitude needing to refer to Co3O4 transaction situations.

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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

Lü 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