Cobalt and lithium prices may fall further amid weak demand prospects

SHANGHAI, May 6 (SMM) – Prices of cobalt and lithium products may continue to face some downward pressure as demand from overseas consumers remains weak and the domestic market is cautious about restocking. 

Some major Chinese factories that use cobalt as raw materials stepped up purchases on the back of an increase in new orders. This is expected to cap the downsides in near-term cobalt prices. 

Concerns about raw materials supply disruption eased as South Africa’s five-week coronavirus lockdown will be gradually removed from May, and cargo delivery via railway and ocean will resume. 

SMM assessed refined cobalt prices at 225,000-240,000 yuan/mt as of April 30, down 7,500 yuan/mt from a week ago. 

In the lithium market, end-users continued to focus on destocking while trades were light during the Labour Day holiday. Cathode materials plants purchased lithium carbonate only as required. 

The inventory pressure has spread to lithium salt producers as most overseas miners slowed operations in the first quarter. This prompted some lithium salt plants to lower costs by expanding production. Lithium salt plants with salt lake brine and mica as raw materials are also grappling with sluggish demand and oversupply. This is expected to expand the downsides of lithium carbonate prices after the holiday. 

Prices of lithium hydroxide, meanwhile, may follow lithium carbonate prices lower in the near term, after lithium hydroxide prices held stable over the past two months. 

Prices of ternary precursor, the raw material for ternary materials used in power batteries, will likely edge lower further as ternary materials producers are pessimistic about their restocking in May as compared with March and April. Those ternary materials plants planned to start purchases after the unveiling of production schedule by battery plants after the Labour Day holiday.

The damage on demand caused by the coronavirus outbreak outside China has taken a toll on the raw material market in China, as evidenced by reduced export orders for ternary materials in May. 

Prices of lithium manganese oxide (LMO) will find limited downside room as prices have bottomed out following consecutive months of slide due to a plunge in export orders of Chinese consumer batteries amid the pandemic.