[SMM Analysis] Cobalt Market Weekly Review: Cobalt Metal Leads Rebound as Sentiment Revives Amid Fundamental Constraints

China's cobalt market saw a long-awaited recovery this week. Cobalt metal took the lead in rebounding, lifting sentiment across cobalt salts and cobalt powder, with prices stabilizing or recovering across products. However, the price center of cobalt intermediates continued to edge lower, and a substantive improvement in demand has yet to materialize. The tug-of-war between sentiment recovery and fundamental constraints formed the main theme of this week's cobalt market.

Cobalt metal was the engine of this recovery. Prices on the electronic platform rebounded rapidly from around 200,000 yuan/mt, touching an intraweek high of 238,000 yuan/mt before consolidating around 230,000 yuan/mt, validating the support at the 200,000 yuan/mt level. The rebound early in the week was driven mainly by bullish news and capital inflows, while fundamental changes were limited: downstream buyers continued need-based procurement, and transaction follow-through was insufficient. On the supply side, mainstream smelters raised ex-works prices to 240,000 yuan/mt, while other smelters generally maintained offers at slight basis premiums. It should be noted that cobalt metal output has recovered rapidly since October, and based on current production resumption plans at some producers, output pressure will gradually emerge going forward - the risk of the supply-demand balance shifting back to inventory accumulation remains unresolved.

Raw materials presented a contrast to the metal segment. The price center of cobalt intermediates continued to decline slowly, with domestic miners' price intentions holding around $11-12/lb and overseas miners' intended offers remaining relatively high. Based on current cobalt salt and cobalt metal prices, downstream feedstock purchase prices still need to be around $10/lb for smelters to avoid spot losses, and the psychological price gap between buyers and sellers persists. During the week, the market began circulating information about deals below $10/lb, with the boundary of low-priced transactions still being tested. Some Chinese miners are currently conducting tenders, and their actual results will provide an important reference for gauging the market's true acceptance levels.

The cobalt sulfate market showed signs of recovery this week. The sharp rebound in cobalt metal lifted sentiment in the cobalt salt market, with smelter offers returning to around 43,000-45,000 yuan/mt, and some producers that had previously sold at low prices also bringing their selling intentions back above 40,000 yuan/mt. However, downstream buying intentions remained around 40,000 yuan/mt and did not move up in tandem - the distance between offers and buying intentions has not truly narrowed. Whether this price recovery can be sustained ultimately depends on whether downstream buyers are willing to accept orders at the new price levels.

The cobalt powder market likewise showed signs of stabilization, with smelter offers holding at 270,000-290,000 yuan/mt. Driven by the rise in cobalt metal, low-priced cargoes have decreased, and previous low-priced deals have recovered to around 260,000 yuan/mt. Changes on the demand side were relatively positive: since mid-to-late October, prices of tungsten carbide - the other major feedstock for cemented carbide - have stabilized and rebounded, and combined with the stabilization of cobalt powder prices, downstream buying interest has increased. However, some leading downstream players still hold relatively ample inventories, and procurement is expected to remain mainly need-based for the rest of this year; purchasing rhythms may return to normal only after inventories are fully digested next year.

Taking the week as a whole, the recovery in the cobalt market was largely a case of "sentiment moving first": the rebound in cobalt metal ignited market confidence, cobalt salts and cobalt powder stabilized in its wake, and downstream buying interest began to loosen. Yet a substantive improvement in demand and output pressure on the supply side remain two constraints hanging over the market. Whether this recovery marks a "sentiment bottom" or a "market bottom" will require three answers in the coming weeks: whether downstream buyers actually accept orders at new prices, the outcome of Chinese miners' tenders, and whether the market can digest resumed output. Before these answers become clear, cautious optimism is advisable regarding the sustainability of the rebound.