[SMM Cobalt Morning Meeting Summary] Weak Off-Season Demand Keeps Prices Under Pressure, Peak-Season Stockpiling Support Gradually Emerges.

Refined Cobalt:

This week, refined cobalt prices continued to consolidate on a subdued note. On the supply side, mainstream smelters lowered their ex-works quotations to 335,000 yuan/mt. Small and medium smelters' quoted spot-futures price spreads remained in a range from a discount of 6,000 yuan/mt to a premium of 4,000 yuan/mt, while mainstream traders' quoted spot-futures price spreads remained at parity to a premium of 10,000 yuan/mt. On the demand side, downstream enterprises were still in the summer break period, maintaining only small-volume need-based restocking, and the trading atmosphere was sluggish. No significant new drivers emerged in the market this week; supply-demand fundamentals changed little, and prices continued to consolidate at lows. Overall, the market remains in the consumer off-season, demand support is limited, and prices may continue to consolidate on a subdued note in the short term. Attention should be paid to changes in the pace of downstream restocking after the summer break ends.

Intermediate Products:

This week, the cobalt intermediate products market remained in a stalemate, with actual transactions still in a vacuum. Recently, some miners launched tenders, with indicative prices of around $21-22/lb. However, against the backdrop of continued weakness in cobalt salts and refined cobalt, downstream buyers and traders saw their psychological price levels fall to around $17-19/lb. The price gap between buyers and sellers was substantial, and tenders continued to fail. Faced with the persistent stalemate, some miners had begun to consider shifting their strategy, suspending direct sales of intermediate products and instead seeking toll manufacturers to process them into refined cobalt before selling, in order to avoid the risk of losses from direct sales at current low prices. In the short term, although miners are willing to hold prices firm, without actual downstream procurement cooperation, the market remains in a bargaining stalemate, and price stabilization still awaits the actual conclusion of transactions.

Cobalt Sulphate:

This week, the cobalt sulphate market continued its subdued trend, with buyers' and sellers' psychological price levels continuing to diverge, making it difficult for transaction volumes to expand. On the supply side, quotations were clearly differentiated: primary smelters had not yet fully digested earlier high-priced raw materials, and their quotations remained near 80,000 yuan/mt. However, MHP cobalt payables fell to around 80% of metal prices, with spot costs already falling back to 76,000-78,000 yuan/mt, indicating that cost support had actually weakened. Recycling enterprises showed a stronger willingness to sell, with mainstream quotations at around 95% of the low end of SMM prices. Some enterprises facing financial constraints continued to lower prices to obtain liquidity, and low-priced resources in the market moved down to 70,000-72,000 yuan/mt. A few extreme transactions were heard at 68,000-70,000 yuan/mt, but these were still dominated by sporadic spot orders. Demand was weak: downstream enterprises' orders recovered slowly, procurement was limited to essential needs, and some inquiries were lowered to 68,000 yuan/mt. However, the wide price gap between buyers and sellers limited actual transactions. In the short term, the cobalt sulphate market has yet to show a clear signal of stopping its decline, and price stabilization will still depend on the concentrated release of downstream restocking demand.

Cobalt Chloride:

This week, both quotations and actual transaction prices in China's cobalt chloride market declined noticeably. This sharp price decline did not stem from a sudden deterioration in short-term supply-demand fundamentals, but rather reflected a rational correction of previously inflated quotations toward actual market transaction prices. Specifically, earlier seller quotations in the market were inflated but lacked support from real liquidity. When buyers with actual procurement demand quoted prices below current spot market offers, or even below cost, sellers with pessimistic expectations, concerned about further price declines and turnover needs, proactively abandoned their original cost floor. This led to some actual transactions at or even below cost and effectively squeezed out the previous inflated premium. Of course, current low prices in the market only represent the attitude of some enterprises, and not all enterprises have begun to sharply lower their quotations. Looking ahead, we believe the likelihood of another sharp decline in cobalt chloride prices in the short term is low. Based on the above logic, the price center has basically shifted from "inflated quotations" toward "actual costs" in the short term, and the market will subsequently enter a bottoming phase.

Cobalt Salt (Co3O4):

This week, Co3O4 prices declined, and the decline in our actual quotations was larger than the market decline, mainly due to proactive corrections to the price system and catch-up declines. The current decline has continued since late May. In the earlier stage, upstream and downstream players, based on expectations of weak stabilization, hoped that we would "slow the decline" to cushion the impact of the sharp price drop on the market; therefore, we mostly used low-end quotations to represent market prices in the earlier period. However, as the decline has stretched to nearly three months, the cushioning effect of our slow decline on market pessimism has gradually diminished, and the gap between actual transaction prices and our earlier quotations has widened. To align more closely with actual transactions, this week we proactively abandoned the previous slow-decline pace and moved our quotations closer to the actual tradable range in the market, resulting in a significantly larger decline than the market average. In the short term, Co3O4 prices will remain closely anchored to the trend of cobalt chloride prices.

Cobalt Powder and Others:

This week, the cobalt powder market still showed no improvement, with both buyers and sellers lacking the willingness to take the initiative, and actual transactions remained sluggish. Producer quotations remained in the range of 430,000-450,000 yuan/mt, but actual transaction focus gradually shifted toward the low end, with some deals falling to 420,000-430,000 yuan/mt; high-priced materials clearly lacked buying support. Pressure on the trading segment increased, with frequent low-price offers continuously pulling down psychological price levels in the market. On the downstream side, end-user orders at cemented carbide enterprises were weak, the raw material consumption cycle lengthened, procurement mainly involved taking delivery under long-term contracts, and spot restocking was minimal. Weaker cobalt carbonate prices further eroded cost support, overall market sentiment was pessimistic, and cobalt powder prices may continue to seek the bottom on a weak note in the short term.

Ternary Cathode Precursor:

This week, ternary cathode precursor prices weakened. During the week, nickel sulphate and cobalt sulphate prices declined, while manganese sulphate prices remained stable.

On discounts, for August and Q3 orders, some producers were willing to raise discounts because earlier sulphate raw material costs were relatively high. For long-term contracts, some producers' annual contracts were already agreed at the beginning of the year, and most producers had not yet raised coefficients. Downstream buyers also showed weak acceptance of coefficient increases for quarterly contracts. Except for some top-tier producers with bargaining power, most producers remained generally stable compared with Q2. As for spot orders, because nickel and cobalt salt prices have been relatively weak recently, some downstream enterprises sought raw material toll processing or self-production, and August order coefficients are expected to weaken.

On production, top-tier producers continued to see strong export orders this month, with production schedules at relatively high levels; domestic top-tier producers also saw a notable recovery in operating rates, while some small and medium producers still had relatively low production schedules due to the off-season.

Looking ahead, sulphate prices have yet to rebound clearly, and new order prices will need to monitor actual downstream demand during the peak season.

Ternary Cathode Material:

This week, ternary cathode material prices rebounded slightly. From the raw material side, nickel sulphate and cobalt sulphate prices continued to decline, while lithium carbonate and lithium hydroxide prices rebounded. However, ternary cathode material quotations changed little overall and remained at a periodic low. In terms of transaction sentiment, some cathode plants and battery cell manufacturers only made small-volume need-based restocking, with relatively limited procurement volumes; the market as a whole still expected future prices to decline. On discounts, nickel, cobalt and lithium discounts were unchanged recently. As the lithium battery consumption tax is about to resume, battery cell manufacturers may pass some cost pressure upstream, and expectations for higher discounts are weak. On demand, August orders increased steadily. Stockpiling for new car models for the traditional September-October peak season boosted domestic cathode order demand; overseas, especially in Europe, auto sales remained strong, continuing to drive ternary demand. In the consumer market, supply mainly relied on long-term contracts, spot transactions were sluggish, and demand still showed no obvious signs of recovery.

LCO:

This week, the LCO market remained relatively quiet, without much volatility. On the supply side, downstream demand recovered slowly. Since the beginning of the year, producers' production and shipments have remained at low levels; price reduction strategies adopted to compete for market share have clearly narrowed profit margins, but actual shipments have not improved accordingly. On the demand side, although production schedules at battery cell manufacturers edged up, the increase was not smoothly transmitted to the LCO segment, and a rising proportion of downstream switching to ternary materials was also an important factor.

News:   

[Sinomine Resource Group's Zimbabwe 100,000 mt/year Lithium Sulfate Project Fully Kicks Off] According to Sinomine Resource Group, recently, Sinomine's Zimbabwe Masvingo Lithium Technology Co., Ltd. formally obtained the Environmental Impact Assessment (EIA) certificate issued by Zimbabwe's Environmental Management Agency (EMA), and the 100,000 mt/year lithium sulfate project officially moved from the preliminary preparation stage to the full construction implementation stage. (From Wall Street News APP)

[Hithium Secures 421 MWh Utility-Scale Energy Storage Project in Australia] On August 12, Hithium officially reached cooperation with Global Power Generation (GPG), an international renewable energy generation enterprise under Spain's NATURGY Group, and signed a battery energy storage system supply agreement to provide a total of 421 MWh of energy storage systems for the Fraser Coast project in Queensland, Australia. (Jin10 Data APP)

[China Charging Alliance Visits Didi Charging for Exchange to Promote Service Quality Upgrade in the Charging Industry] According to the China Charging Alliance, on August 13, Zou Peng, Executive Secretary General of the China Electric Vehicle Charging Infrastructure Promotion Alliance, led a team to Didi Charging for an exchange. Lin Zhitang, General Manager of Didi Charging, together with heads of relevant departments, participated in the exchange. The two sides exchanged views on "jointly promoting the upgrade of service experience in the charging industry." Through the exchange, the two sides reached a consensus on "deepening industrial cooperation and jointly promoting user experience upgrade," and will work with partners across the industry to promote high-quality development of the charging sector. (Jin10 Data APP)

Data source statement: Except for public information, all other data are based on public information, market communication, and SMM's internal database models, and are processed by SMM. They are for reference only and do not constitute decision-making advice.

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