[SMM Analysis]Higher Cobalt Tetroxide Production Lifted China’s Cobalt Sulphate Output by Nearly 7% MoM in August

According to SMM data, China’s cobalt sulphate output stood at 4,819 mt in metal content in August 2026, up 6.98% MoM but down 8.85% YoY.

In terms of feedstock, the share of output produced from mined feedstock rose from 49% in July to 52% in August. MHP accounted for approximately 44% of total output, while cobalt intermediates accounted for around 9%. The share of recycled feedstock declined from 42% to 39%, while the cobalt metal dissolution route remained broadly stable at around 8%. Most of the increase in August came from mined feedstock, while recycled-feedstock output rose only slightly.

Cobalt sulphate output recovered in August, but spot prices continued to fall. The average SMM price for domestic cobalt sulphate with a cobalt content of at least 20.5% declined from around 80,500 yuan/mt at the beginning of the month to approximately 71,000 yuan/mt at month-end, a drop of about 11.8%. The monthly average stood at around 76,000 yuan/mt, down approximately 10% from July.

The production increase mainly came from integrated producers supplying their own downstream operations and did not result in a noticeable improvement in spot purchases. Meanwhile, lower cobalt intermediate prices weakened cost support. Downstream buyers continued to rely on long-term contracts and purchases for immediate needs, pushing spot transaction prices lower.

Higher cobalt tetroxide production was the main growth driver

According to SMM, a cobalt tetroxide producer using cobalt sulphate as feedstock raised its production schedule in August. This increased its captive cobalt sulphate production and was the main reason for the monthly rise in China’s cobalt sulphate output.

China’s cobalt tetroxide output increased by 2.1% MoM in August. Output using the cobalt sulphate route surged by nearly 39% MoM, lifting its share of total cobalt tetroxide production from 9% to 13%.

Although cobalt chloride remained the dominant feedstock for cobalt tetroxide production, the increase in cobalt sulphate-based output was concentrated among a small number of producers and provided a notable boost to cobalt sulphate production during the month.

Ternary precursor production edged higher, while the recycling sector showed mixed performance

Ternary precursor is the largest downstream consumer of cobalt sulphate. Some integrated producers adjust their cobalt sulphate production schedules according to their ternary precursor orders. As a result, production changes at leading precursor producers are transmitted directly to their upstream cobalt sulphate operations.

China’s ternary precursor output rose 0.76% MoM and 23.1% YoY in August. The increase was mainly concentrated among several leading producers, whose integrated cobalt sulphate operations raised production to meet internal demand. Production schedules at smaller precursor producers changed little, while their external cobalt sulphate procurement remained focused on long-term contracts and purchases for immediate needs.

Performance in the recycling sector was mixed. As cobalt sulphate prices continued to fall, the economics of feedstock procurement deteriorated for some recycling companies, prompting them to reduce feedstock intake or lower production schedules. Meanwhile, new recycling producers entered the cobalt sulphate market and contributed additional supply.

As a result, recycled-feedstock cobalt sulphate output increased by only around 0.8% MoM in August, as output from new producers largely offset production cuts at other companies.

September output is expected to remain broadly stable

SMM expects China’s cobalt sulphate output to increase by around 0.5% MoM in September, remaining broadly stable from August.

On the demand side, cobalt tetroxide production is expected to increase by around 13% MoM, continuing to support cobalt sulphate consumption. In contrast, ternary precursor output is forecast to decline by approximately 3% MoM, which may lead some integrated producers to adjust their cobalt sulphate production schedules. The recycling sector also has limited scope for a significant production increase under the current feedstock economics.

With downstream production trends diverging and spot purchasing remaining subdued, cobalt sulphate prices are expected to stay at low levels in the near term. The market should continue to monitor whether the increase in cobalt tetroxide production can be sustained, the actual performance of peak-season ternary precursor orders, and changes in cobalt intermediate and recycled feedstock prices.