Cobalt and lithium prices further retreated on week amid light trades

SHANGHAI, Jun 23 (SMM) – Prices of refined cobalt and cobalt intermediate products in China edged lower last week. Some domestic cobalt suppliers cut output due to shortage of raw materials, but some producers held production of refined cobalt at high levels as refined cobalt prices outperformed that of cobalt salts. 

Demand for refined cobalt was lower as downstream consumers had replenished sufficient stockpiles when prices started to rally in May, amid expectations of continuous rise in prices. This led to current muted trades and accounted for the slight loss in refined cobalt prices last week. 

Anticipations of the upcoming arrival of seaborne cobalt raw materials shipped in May also weighed on spot cobalt prices. However, any downsides in prices of cobalt intermediate products will be limited. 

Prices of refined cobalt continued to fall in the week ended June 19, decreasing 2,500 yuan/mt from the previous week to 245,000-255,000 yuan/mt, while prices of cobalt hydroxide edged down $0.05/lb on the week to $9.8-10.3/lb, SMM assessed.

Enquires for lithium carbonate increased in the domestic market last week, but actual trades were thin, leading to declines in prices. SMM learned that some lithium carbonate refining and processing firms restarted production this month as the price spread between industrial- and battery- grade lithium carbonate had expanded wide enough to cover costs of those processors, meeting their demand for cost reduction. 

Amid end-users demand for lower prices, producers of cathode materials continued to seek lower costs in procuring lithium carbonate. SMM expects near-term prices of lithium carbonate to remain under downward pressure amid intense competition.

SMM assessed prices of battery-grade lithium carbonate 1,500 yuan/mt lower from a week ago, standing at 39,500-42,000 yuan/mt as of June 19, with prices of industrial-grade materials falling 1,000 yuan/mt during the same period to 32,000-37,000 yuan/mt.

In the cobalt market, cost pressure kept cobalt sulphate producers less willing to sell at lower prices. Downstream demand for cobalt chloride weakened, and this may see cobalt chloride prices trading weakly in the near term. 

The inflow of seaborne lithium carbonate continues to threaten downward risks of domestic lithium salt prices, but the main focus in the market will still lie on the resumption of end-users demand. 

In the auto market, the capacity proportion of lithium iron phosphate (LFP) batteries installed on passenger vehicles will increase in June as Chinese carmaker BYD is expected to start mass production of its new Han electric vehicles (EVs) this month, as it has received pre-sale orders for over 15,000 vehicles of the new model. 

Top power battery producers in China saw the orders from overseas automakers recovering, and this prompted them to raise production on the high-nickel battery lines from a month ago. A number of battery producers are still working to test different ternary products, aimed at cutting cobalt use and lowering costs. Brisk demand and a rise in orders drove some small-sized digital battery producers to shift business to electric two-wheeler and power tool sectors.