[SMM Cobalt Morning Briefing] Off-Season Demand Remains Under Pressure; Prices Weaken Across Multiple Segments, Intensifying Market Tug-of-War

Refined cobalt:

On Monday this week, refined cobalt spot prices continued to grind lower. Supply side, mainstream smelters maintained their ex-factory quotations at 340,000 yuan/mt, while other small and medium-sized smelters largely suspended external quotations due to loss-making pressure. On the demand side, downstream enterprises remained in their summer break cycle, with weak purchase willingness and only small-scale essential restocking. The price decline this week was mainly driven by sentiment factors, as overseas spot and futures quotation platforms simultaneously lowered their prices, and previously relatively firm prices outside China started to ease, significantly dampening domestic market sentiment. Coupled with the continued weakening of cobalt salt and intermediate product prices in China recently, bearish market sentiment gradually intensified. Some suppliers, who had been on the sidelines earlier, began to sell off, further increasing downward pressure on prices. Overall, the cobalt market is currently in a traditional consumption off-season, with limited support from the demand side. Combined with weakening overseas prices and a turn in market sentiment to bearishness, prices are likely to remain in the doldrums in the short term.

Intermediate products:

On Monday this week, the cobalt intermediate products market maintained a sluggish pattern, with actual trading remaining limited. Recently, some miners initiated multiple tenders for intermediate products, but due to large discrepancies in price expectations between upstream and downstream, none of the tenders resulted in actual transactions. The intended price for the latest tender was around $21~21.5/lb. Affected by the continued weakness in cobalt salt and refined cobalt prices, the psychological price level of downstream smelters and traders for raw materials further pulled back to around $18-19/lb, with some enterprises even willing to accept only $17/lb. The price gap with miners' quotations continued to widen, making actual transactions difficult to materialize. In the short term, despite miners' willingness to hold prices firm, downstream demand support is insufficient, and the tug-of-war between sellers and buyers persists. Price improvement still depends on the recovery of actual downstream demand.

Cobalt sulphate:

On Monday this week, the cobalt sulphate market maintained a sluggish pattern, with the stalemate between upstream and downstream remaining unchanged. Supply side, primary smelters using intermediate products and MHP, supported by costs, held their quotations firmly above 80,000 yuan/mt. Mainstream recycling enterprises maintained their quotations at around a 5% discount to the SMM low-end price, while a few enterprises with stronger willingness to sell had lowered their quotations to 70,000~73,000 yuan/mt, and there were even reports of a small number of extreme low prices below 70,000 yuan/mt. The demand side remained weak, with downstream procurement intentions continuing to be reduced, and some extreme inquiries being pressed below 70,000 yuan/mt. In the short term, cobalt sulphate prices still face certain downward pressure, and market stabilization and recovery still await the release of concentrated downstream restocking demand.

Cobalt chloride:

The cobalt chloride market maintained a sluggish trend this week, with actual transactions remaining sluggish. Supply side, from a real-time cost perspective, recycling and refined cobalt return financing paths had already fallen significantly below market offer and transaction prices. However, upstream smelters held heavily accumulated high-cost inventory, and amidst continued price weakness, it was difficult to dilute costs through low-level procurement. Under inventory cost support, quotations overall remained relatively firm. Nevertheless, some enterprises, in order to accelerate turnover and reduce loss-making pressure, have been slightly lowering their quotations to promote sales. However, downstream purchasing strength was insufficient, and the price reduction had limited effect in boosting transactions. Demand side, Co3O4 enterprises themselves had high inventories, coupled with no improvement in end-user consumption, leading to sluggish purchase willingness. In the short term, cobalt chloride prices still face certain downward pressure.

Cobalt salts (Co3O4):

The Co3O4 market had a sluggish trading atmosphere this week, with actual trading volumes being scarce. Supply side, producers generally maintained low-load operations amid high inventories, thin profits, and lingering risks of inventory buildup. Demand side, although cathode material plants had some inquiries, few actual purchases were concluded, as current raw material inventories could still cover production needs, with no urgent restocking requirements. Overall, Co3O4 prices are similarly likely to continue weakening in the short term.

Cobalt powder and others:

On Monday this week, the cobalt powder market continued its weak trend, with actual transactions remaining sluggish. Supply side, mainstream producers' quotations were maintained in the range of 440,000-460,000 yuan/mt, with some actual transaction prices dipping to 430,000-440,000 yuan/mt. In the trading sector, low-price offers increased, further lowering the market's psychological price level. On the raw material side, cobalt carbonate prices were under pressure, with some quotations already having fallen below the 200,000 yuan/mt mark, and market trading trending toward stagnation, lacking effective transaction guidance. Downstream cemented carbide enterprises remained constrained by terminal order performance, with no improvement in raw material consumption rates, and procurement pace staying slow. Except for long-term contract orders, spot order transactions were relatively limited. From a market sentiment perspective, participants mostly adopted a wait-and-see attitude, generally believing that market conditions are unlikely to see significant improvement in the short term.

Ternary cathode precursor:

Early in the week, ternary cathode precursor prices held steady, and today, nickel sulphate, cobalt sulphate, and manganese sulphate prices were steady.

Regarding discounts, for August and Q3 orders, due to higher costs of sulphate raw materials previously, some producers had the intention to increase discounts. For long-term contracts, some producers' annual contracts were settled at the beginning of the year, and most producers' coefficients had not yet been raised. For quarterly orders, downstream acceptance of coefficient increases was also relatively weak, and except for some top-tier producers with certain bargaining power, the coefficients for most producers remained stable compared with Q2. For spot orders, due to the relatively weak performance of nickel and cobalt salt prices recently, some downstream enterprises sought raw material toll processing, and the order coefficients for August are expected to remain stable overall compared with July.

Production side, top-tier producers' export orders continued to perform well this month, with production schedules at relatively high levels, and domestic top-tier producers' production loads had also clearly recovered. However, some small and medium-sized producers still had relatively low production schedules due to the off-season.

Looking ahead, sulphate prices have not yet shown a clear rebound, and prices for subsequent new orders will need to focus on the pace of downstream stockpiling in Q3.

Ternary cathode material:

Early this week, ternary cathode material prices rebounded slightly. From the raw material side, nickel sulphate prices performed relatively weakly, cobalt sulphate and manganese sulphate prices were temporarily stable, and lithium carbonate and lithium hydroxide continued to consolidate at lows. In terms of transaction sentiment, some cathode plants and battery cell manufacturers only made small-scale essential restocking, with relatively limited procurement volumes, and the overall market still held expectations for future price reductions. Regarding discounts, there were no adjustments in nickel, cobalt, and lithium discounts recently. As the lithium battery consumption tax is about to be resumed, battery cell manufacturers may pass on some cost pressure upstream, and expectations for discount increases are weak. On the demand side, August orders showed steady growth, with demand from the EV market both in China and overseas remaining high; however, the consumer market has yet to show clear signs of recovery.

LCO:

The LCO market operated relatively stably this week. Supply side, downstream demand recovery was slow, and production and shipments of various enterprises had been at low levels since the beginning of the year. The price reduction strategy adopted to compete for market share had significantly narrowed profit margins, but actual shipments did not improve accordingly. Demand side, although battery cell manufacturers' production schedules had rebounded slightly, the growth was not smoothly transmitted to the LCO segment. The rising proportion of downstream switching to ternary materials was also an important influencing factor. Overall, there is still a possibility of LCO prices declining in the near term.

News:    

[From Process Simplification to Fund Increase: Multiple Regions Improve Auto Consumption Subsidy Policies] According to incomplete statistics, since the end of July 2026, Jinan, Chongqing, Xi'an, Qingdao and other places have successively issued announcements or new policies to optimize automobile consumption subsidy policies. The most common method is to simplify and optimize the subsidy application process. Lang Xuehong, Deputy Secretary General of the China Automobile Dealers Association, stated that various regions have formulated differentiated subsidy policies based on their local consumption structures and industrial characteristics. Lang Xuehong believed that including used cars in the subsidy scope not only responds to the long-standing calls of consumers and enterprises, but also aligns with the current consumer market environment. In the first half of this year, domestic used car transaction volume approached that of new car sales, reflecting that some users with rigid demand are more inclined to choose used cars with higher cost-effectiveness. Providing subsidies for used car transactions can meet the travel needs of low-income groups and drive employment and consumption in downstream service links such as appraisal and evaluation and maintenance and repair, expanding the full-chain pulling effect of automobile consumption. (Xinhua News Agency)

[Guocheng Mining: Controlling Subsidiary Signs Ten-Year Lithium Carbonate Long-Term Cooperation Agreement] Guocheng Mining announced that its controlling subsidiary, Sichuan Guocheng Lithium Industry Co., Ltd., signed a "Lithium Carbonate Long-Term Cooperation Agreement" with related party Jike Supply Chain Management Co., Ltd., agreeing to supply battery-grade lithium carbonate from August 2026 to July 2036. Pricing will be based on the monthly average price of the Guangzhou Futures Exchange with tiered discounts. This transaction aims to lock in long-term sales channels, hedge price fluctuation risks, and improve the lithium industry layout. (Jinshi Data)

[MIIT Publishes the "Catalogue of New Energy Vehicle Models Enjoying Vehicle and Vessel Tax Reduction and Exemption" (89th Batch)] On August 7, the Ministry of Industry and Information Technology (MIIT) released a notice regarding the proposed contents of the "Road Motor Vehicle Manufacturing Enterprises and Product Announcement" (410th batch) and the "Catalogue of Energy-Saving and New Energy Vehicle Models Enjoying Vehicle and Vessel Tax Reduction and Exemption" (89th batch). In the catalogue, multiple models such as BYD's Fangchengbao Titanium 9 and Seres' AITO M8 are listed. (Jinshi Data)

Data Source Statement: All data other than public information are processed and derived by SMM based on public information, market communication, and reliance on SMM's internal database models, and are for reference only, not constituting any decision-making advice.

SMM New Energy Research Team

Wang Cong 021-51666838

Ma Rui 021-51595780

Lin Ziya 86-2151666902

Feng Disheng 021-51666714

Lu 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