[SMM Cobalt Morning Meeting Summary] Weak Demand and Falling Costs Keep Industry Chain Prices Under Pressure and Hitting Bottom

Refined cobalt:

This week, the refined cobalt market remained weak, with futures prices breaking below the previous 250,000 yuan/mt mark and currently consolidating around 245,000-250,000 yuan/mt. The pre-holiday market expectations for DRC quota adjustments ultimately fell through. After returning from the National Day holiday, refined cobalt prices re-entered a downward trajectory. At this week's industry conference, market expectations for Q4 cobalt prices were broadly pessimistic, further weighing on sentiment, and futures prices drifted lower. On the supply side, mainstream smelters have not yet adjusted their Ex-works prices, but their premiums over futures have become notably high, and the likelihood of downward adjustments is rising. Trader basis quotes remained largely unchanged, with low-end brands still quoted around 2,000-3,000 yuan/mt and mainstream brand new cargo quoted at 14,000-15,000 yuan/mt. On the demand side, downstream enterprises maintained just-in-time procurement. Some enterprises believe refined cobalt prices need to fall to around 200,000 yuan/mt before the next effective support level forms, and a wait-and-see sentiment prevails. After the previous support level was breached, the market is searching for a new equilibrium: demand has not improved materially, and smelter Ex-works prices face potential catch-down pressure, meaning the bottoming process for refined cobalt prices has likely not yet run its course.

Intermediate products:

This week, the cobalt intermediate product market remained in a vacuum state with no quotes and no transactions, but miners' sentiment has quietly shifted. On the supply side, most miners chose to continue waiting, planning to first store intermediate products in bonded warehouses and consider sales only after actual demand emerges, with willingness to actively ship clearly reined in. The demand side was even more sluggish, with most smelters having no plans to purchase spot orders or long-term contracts for the time being. Some enterprises even expect intermediate product prices may fall back to near miners' production costs, and are delaying purchases as long as possible. During the week, market rumors circulated of a transaction at just above $12/lb, which SMM has not yet confirmed. Miners moving cargo into bonded warehouses essentially means temporarily setting aside pricing initiative—both buyers and sellers are choosing to wait, the stalemate is being further prolonged, and the leverage to break the deadlock is tilting toward the downstream side.

Cobalt sulphate:

This week, the cobalt sulphate market continued to decline, with the tug-of-war between buyers and sellers entering a "buyer's bid" phase. On the supply side, smelters still refrained from proactively quoting, instead waiting for buyer inquiries: if prices were acceptable, deals were concluded; if the price spread was too wide, they chose to walk away. On the demand side, ternary and LCO demand remained weak and is expected to weaken further in Q4. Downstream buyers were concerned about the risk of further price declines and firmly pushed for lower prices. Some downstream purchase intention prices had fallen to as low as 46,000-48,000 yuan/mt, and rumors of small-volume transactions at even lower prices circulated during the recent industry conference. Cost side: although current MHP cobalt payables stand at around 54%, some downstream buyers have pushed their intended MHP cobalt payables to 50% or lower. Ternary battery black mass cobalt payables are at 68%. Based on spot prices, cobalt sulphate production costs are approximately 48,000 yuan/mt, which on the surface matches downstream intention prices. However, there is a time lag between procurement and production, and the actual cost of cargo currently being sold externally remains at 50,000 yuan/mt, which is why some smelters continue to hold prices firm. The mismatch between book costs and inventory costs makes it difficult to bridge the price divergence between buyers and sellers in the short term, and the direction of the price center still awaits a new equilibrium from the cost and demand sides.

Cobalt chloride:

This week, cobalt chloride market sentiment remained subdued, with the price center shifting further downward. On the supply side, with demand showing no signs of improvement, the entire industry remained in a destocking phase. September production fell notably MoM, and production cuts remained the primary means for producers to relieve inventory pressure. The scope of small-plant shutdowns continued to expand, with some enterprises having essentially ceased cobalt chloride production, and pessimism spread across the supply side. On the demand side, production cuts at downstream Co3O4 producers continued to widen, further contracting raw material procurement demand. Market transactions remained sluggish with extremely poor liquidity. Downstream purchases were mostly back-to-back and restocking based on need, with no willingness to stockpile and a strong wait-and-see sentiment. In recent discussions, industry participants generally believe this year's market is essentially set and unlikely to show meaningful improvement. Some downstream clients have also turned pessimistic about demand recovery expectations in H2 next year, and market trading remained persistently thin. If demand still shows no substantive recovery, the pace of price declines may accelerate. Overall, the cobalt chloride market is expected to remain in the doldrums in the short term.

Cobalt salts (Co3O4):

This week, Co3O4 market sentiment showed no improvement, with quote centers shifting further downward WoW. The market remained in a grinding-lower atmosphere, and pessimistic expectations had yet to reverse. On the supply side, affected by persistently weak downstream demand, multiple enterprises remained in production cut mode. Some enterprises still held relatively high inventory levels, and shipment pressure remained unabated. On the demand side, existing shipments were primarily for delivering earlier long-term contracts and undertaking processing business. New purchases were nearly absent, with downstream buyers making weekly just-in-time purchases and having clearly stated they will not add new purchases this year. Order signing for November-December was also dominated by next year's orders, and purchasing sentiment was extremely cautious. On the end-user side, parts orders for Apple's high-end models were revised down from original plans. The memory chip supply issue is expected to ease by mid-next year at the earliest, or pessimistically by year-end. Cathode plants generally do not hold a favorable view of this year's market, and confidence across the industry chain remains insufficient. In recent discussions, market sentiment remained bearish. If transactions stay sluggish, prices may continue to be revised down. Overall, the Co3O4 market is expected to remain in the doldrums in the short term.

Cobalt powder and others:

This week, the cobalt powder market showed no post-holiday recovery, with prices continuing their downward trend. On the supply side, smelter quotes continued to loosen, with current market quotes broadly lowered to 330,000-340,000 yuan/mt. Some enterprises quoted even lower to facilitate transactions, and the sense of price competition was growing. The demand side remained lackluster, with cemented carbide enterprises resuming production slowly after the holiday and purchase willingness staying persistently weak. Market transactions lacked even the most basic support. From the pre-holiday "holiday stagnation" to the post-holiday "resumed but not buying," the absence of cobalt powder demand has shifted from a holiday factor to a structural issue. The stabilization of the price center will ultimately need to be confirmed by real orders from downstream.

Ternary cathode precursor:

This week, ternary cathode precursor prices weakened, with cobalt sulphate and nickel sulphate prices both declining during the week, while manganese sulphate prices held steady.

On discounts, for November and Q4 orders, some producers still intend to hold payables firm due to the earlier high cost of sulphate raw materials. On long-term contracts, some producers had already agreed on annual contracts at the beginning of the year, and most producers have not yet raised payables. Downstream acceptance of payables increases for quarterly orders was also weak, and Q4 long-term contract payables are expected to remain stable to slightly weak. On spot orders, given the relatively weak recent performance of nickel and cobalt salt prices, coupled with weak downstream demand for some producers, November order payables are expected to decline.

On production, top-tier producers' export orders remained strong this month, with production schedules at relatively high levels. However, some domestic top-tier producers saw operating rates decline due to end-use demand falling short of expectations and tightness in key raw materials. Although this month improved slightly MoM, overall levels remained below Q3 highs.

Looking ahead, sulphate prices have yet to show a clear rebound, and future new order prices will depend on actual downstream demand in Q4.

Ternary cathode material:

This week, ternary cathode material prices continued their downward trend, with the decline further intensifying. From the raw material side, nickel sulphate prices continued to grind lower, cobalt sulphate prices saw a notably sharper decline, and lithium carbonate and lithium hydroxide prices fell sharply for consecutive sessions, accelerating the decline in ternary cathode material prices. Producers generally faced significant inventory cost pressure. On demand, EV market orders were revised further down from the cautious expectations at the start of the month. Producers continued destocking, slowed production pace, and showed weak enthusiasm for raw material purchases. In the consumer market, affected by weak end-use digital demand and persistently falling raw material prices, transactions were equally sluggish. Battery cell manufacturers had no urgent restocking needs and maintained a wait-and-see stance. On production schedules, China's ternary cathode production in October is expected to be flat MoM from September.

LCO:

This week, China's LCO market remained weak overall. The previously anticipated traditional peak-season expectations fell through, and industry fundamentals remained under pressure. Upstream Co3O4 prices continued to decline, with cost support steadily weakening and dragging LCO product quotes down in tandem. On the supply side, domestic cathode material enterprises generally maintained a cautious produce-based-on-sales production schedule strategy, with industry output holding steady. However, demand-side weakness was pronounced, with downstream end-user clients showing insufficient willingness to stockpile and purchases mostly consisting of just-in-time small-volume replenishment. The overall pace of inventory digestion across the industry chain remained slow, and the supply-demand pattern had yet to show substantive improvement. The dual pressure of falling costs and sluggish end-use demand persisted. Overall, the post-holiday LCO weakness continued, with prices consolidating lower. If end-use demand remains persistently weak and the peak season fails to materialize, LCO prices still have room for further decline.

News:    

[Ganfeng Lithium: Net profit attributable to shareholders in the first three quarters of 2026 was 5.012 billion yuan, up 19,540.50% YoY] Ganfeng Lithium announced that Q3 2026 revenue was 13.062 billion yuan, up 109.03% YoY; net profit attributable to shareholders of the publicly listed firm was 755 million yuan, up 35.62% YoY; and non-GAAP net profit was 788 million yuan, up 2,803.44% YoY. Revenue in the first three quarters of 2026 was 36.159 billion yuan, up 147.24% YoY; net profit attributable to shareholders of the publicly listed firm was 5.012 billion yuan, up 19,540.50% YoY; and non-GAAP net profit was 4.636 billion yuan, up 592.14% YoY. (Jin10 Data APP)

[Tinci's Indonesia electrolyte project expected to enter trial production in December 2026] According to Tinci, the Indonesia Weda Bay Industrial Park (IWIP) recently held a groundbreaking and commercial operation ceremony for nickel downstream industry projects, as well as the first export ceremony for EV batteries. Construction of Tinci's Indonesia electrolyte project is accelerating, with trial production expected to begin in December 2026. As the park's first lithium-ion battery electrolyte project, the project is being advanced by Tinci's Indonesian subsidiary, with a planned annual capacity of 20,000 mt of lithium-ion battery electrolyte. It will provide key material support for the park's battery industry chain and further enhance Tinci's localized supply capability in Southeast Asia. (Jin10 Data APP)

[China's September EV and ESS battery sales were 222.7 Gwh, up 52% YoY] Data from the China Automotive Power Battery Industry Innovation Alliance shows that in September, China's EV and ESS battery sales were 222.7 Gwh, down 0.2% MoM and up 52% YoY. Among these, power battery sales were 149.2 Gwh, accounting for 67.0% of total sales, up 1.7% MoM and up 35.0% YoY; ESS battery sales were 73.5 Gwh, accounting for 33.0% of total sales, down 3.7% MoM and up 104.4% YoY. From January to September, China's cumulative EV and ESS battery sales were 1,681.7 Gwh, up 57.6% YoY. (Jin10 Data APP)

Data source statement: All data other than public information is processed by SMM based on public information, market communication, and SMM's internal database models, and is for reference only and does not constitute investment advice.

SMM New Energy Research Team

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