[SMM Cobalt Morning Meeting Summary] Tug-of-war between sellers and buyers in refined cobalt supply and demand, prices oscillate with highs and lows in the short term

Refined Cobalt:

This week, the low-end prices of refined cobalt rose slightly, while the high-end prices remained stable. In terms of supply, refined cobalt smelters maintained long-term contract supplies, with fewer spot order quotations. Low-priced goods held by traders were running out, leading to an increase in low-end quotations. For high-end prices, some traders reported that the ex-factory price of a certain high-end brand had increased, prompting traders to follow suit and refuse to budge on prices. However, due to weak purchase willingness from downstream buyers, market transaction prices gradually returned to levels below the ex-factory prices. On the demand side, as social inventory of refined cobalt remained high and downstream demand showed no significant improvement, most downstream producers continued to make just-in-time procurement, resulting in mediocre actual transactions. Refined cobalt prices are expected to maintain a fluctuating trend in the short term.

Intermediate Products:

This week, spot prices of cobalt intermediate products continued to rise. On the supply side, a miner announced force majeure this week, further boosting bullish sentiment among miners and traders. Most companies suspended quotations, while a few raised their quotations further. On the demand side, smelters faced challenges such as losses and sluggish downstream demand. Amid an uncertain outlook, they postponed procurement and primarily consumed their own inventory. Some smelters with relatively low inventory attempted to inquire in the market, but significant price differences between buyers and sellers made actual transactions difficult. Overall, due to the DRC's export delay policy, China's cobalt intermediate products are expected to face raw material shortages in the future, providing upward momentum for prices. However, attention should be paid to the impact of rising raw material prices on downstream demand.

Cobalt Sulphate:

This week, cobalt sulphate prices maintained a fluctuating trend. On the supply side, a miner announced force majeure this week, leading most smelters and traders to further raise quotations for new goods. Some smelters and traders reported transactions of older goods at lower prices. On the demand side, orders from downstream ternary and Co3O4 enterprises showed no significant improvement, with most adopting a wait-and-see sentiment and focusing on digesting previous inventory. Refined cobalt procurement remained suspended due to weak economic viability. Overall, amid an uncertain outlook, significant price differences between buyers and sellers persisted. Upstream suppliers refused to budge on prices, while downstream buyers showed weak purchase willingness, resulting in limited actual transactions. Cobalt sulphate prices are expected to maintain a fluctuating trend next week, awaiting feedback from actual transactions.

Cobalt Chloride:

Currently, cobalt chloride quotations are at 61,000-63,000 yuan/mt, with the market remaining sluggish and only a few transactions occurring. On the supply side, smelters maintained a strong wait-and-see sentiment, resulting in limited market transactions. On the demand side, downstream enterprises had relatively sufficient inventory. While market inquiries were active, buyers remained cautious about transactions. In terms of prices, although upstream smelters quoted higher prices, actual transaction prices hovered around 61,000 yuan/mt, with only a few transactions at 62,000 yuan/mt. Cobalt chloride prices are expected to remain stable within the 61,000-62,000 yuan/mt range in the short term.

Cobalt Salts (Co3O4):

Currently, Co3O4 quotations are in the range of 200,000-220,000 yuan/mt, with both upstream and downstream players adopting a wait-and-see attitude, resulting in limited actual transactions, mostly for long-term contract deliveries. On the supply side, Co3O4 producers chose to observe overall market sentiment and demand, with only limited shipments. On the demand side, LCO cathode plants had relatively low inventory, but the market was significantly influenced by sentiment, leading to a wait-and-see approach. In terms of prices, Co3O4 producers indicated shipment expectations at 210,000-220,000 yuan/mt, but high-priced Co3O4 transactions remained limited. In the long term, Co3O4 prices will still be influenced by cobalt inventory. Whether current industry inventory can sustain until December will be a key factor affecting price trends.

Cobalt Powder and Others:

Due to continued delays in raw material imports, cobalt powder market quotations remained firm at high levels this week. Although downstream alloy enterprises showed increased inquiry activity, the alloy market demand remained sluggish, resulting in limited actual trading volumes for cobalt powder. Despite occasional price fluctuations, alloy enterprises generally maintained a cautious wait-and-see attitude under the dual pressures of high costs and weak demand, leading to a relatively sluggish market trading atmosphere. In the short term, the tug-of-war between buyers and sellers in the cobalt powder market is expected to continue.

Ternary Cathode Precursor:

This week, ternary cathode precursor prices rose slightly. In terms of raw material costs, nickel sulphate and manganese sulphate prices remained basically flat, while cobalt sulphate prices increased, driving up the absolute prices of precursors. Currently, there were no significant adjustments to spot order discount coefficients. Overall demand in the ternary market remained mediocre, and the price increase lacked solid support. Downstream battery cell manufacturers still held the bargaining power over discount coefficients and showed little reaction to the rise in cobalt sulphate prices, maintaining stable discount strategies. Long-term contract discounts are not expected to change significantly in the short term. On the demand side, domestic NEV market demand for 6-series products showed some improvement, while overseas demand for 8-series products also increased slightly. However, overall orders were mainly concentrated among leading manufacturers. The consumer market continued to exhibit mediocre performance. On the supply side, as July marks the start of the restocking phase, overall production schedules are expected to rebound.

Ternary Cathode Material:

This week, prices of 5-series ternary cathode materials increased, while prices of 6-series and 8-series products saw slight corrections. In terms of raw materials, nickel sulphate and manganese sulphate prices remained basically flat, while cobalt sulphate and lithium carbonate prices rose, and lithium hydroxide prices continued to decline. The 5-series products received some cost support, driving their absolute prices upward. However, due to weak market demand and the dominant position of battery cell manufacturers in pricing negotiations, ternary cathode material prices lacked room for significant increases. Downstream battery cell manufacturers showed little reaction to the rise in cobalt sulphate prices, and discount coefficients are expected to remain stable. On the demand side, some new car models in the NEV market drove moderate stockpiling, with orders mainly concentrated among leading battery cell manufacturers. Overseas battery cell manufacturers experienced some order transfers, impacting orders for cathode materials. The consumer market was in its traditional off-season, with recent orders performing relatively mediocrely. On the supply side, as July marks the start of the restocking phase, ternary cathode material production is expected to increase slightly.

LCO:

Recently, LCO prices have seen significant increases due to changes in raw material costs: Battery-grade lithium carbonate prices continued to rise, and Co3O4 prices were influenced by DRC policies, leading to strong bullish sentiment. On the supply side, Co3O4 producers quoted high prices, while LCO cathode plants showed low purchase willingness for high-priced Co3O4. On the demand side, end-use demand is entering the off-season, leading to a decline in demand for LCO. Overall, LCO prices are expected to rise significantly along with the increases in Co3O4 and lithium carbonate prices.

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SMM New Energy Research Team

Cong Wang 021-51666838

Rui Ma 021-51595780

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Disheng Feng 021-51666714

Yanlin Lyu 021-20707875

Zhicheng Zhou 021-51666711

Zihan Wang 021-51666914

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Haohan Zhang 021-51666752Z46/>Boling Chen 021-51666836

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