SMM Review of Lithium and Cobalt Market Back in February

SHANGHAI, Mar 11 (SMM) - The supply of cobalt sulphate was in a slight surplus of 173 mt in metal content in February amid normal restocking. China’s output of cobalt sulphate dropped by 12% MoM in February. The supply in March is expected to increase by 2% from February to 5,876 mt in metal content, as the shipments have increased slightly, and the working days returned to normal as well.

On the demand side, the demand for cobalt salts declined in February due to the decrease in precursor orders. The demand may rise in March after the commissioning of some new precursor capacities. The cobalt salt costs may be driven up by higher prices overseas, and the supply of intermediate products will remain tight. However, the precursor enterprises have restocked cobalt salts and nickel salts cautiously as they worry that the high nickel prices can hardly boost the downstream prices. As such, the prices of cobalt salts may rise slowly in March.

The domestic lithium carbonate market saw a supply deficit of 5,016 mt in February. China’s lithium carbonate output was 18,609 mt in February, a month-on-month decrease of 2% but year-on-year increase of 51%. Some smelters were still in suspension for maintenance in February, and the lack of raw materials as well as fewer working days resulted in the decline in supply. The demand weakened, as CAM enterprises could hardly make purchases, and the rising costs failed to push up the downstream prices. The supply is expected to rebound in March after some smelters complete the maintenance and the weather turns warmer. The lithium carbonate prices may only inch up in March amid easing supply shortage.

The supply of nickel sulphate was in a deficit of 1,319 mt in Ni content. The enterprises cut their production due to high prices of raw materials. The supply declined further by 4% on the month in February. The prices of nickel sulphate rose along with the raw material prices, but the overall profits were poor, and the producers cut the production. The nickel prices have fluctuated fiercely in March. The prices of nickel salts based on the LME nickel prices soared, which drove up the costs further. The nickel salt plants are expected to maintain low operating rates. The nickel sulphate supply will continue to tighten amid expanding production of NMC materials. Therefore, the prices of battery-grade nickel sulphate are expected to remain in an upward trend after returning to rationality.