Cobalt market trading weakened！The cobalt mining giant slashed the output target due to the low cobalt price

SMM, February 2: Approaching the Spring Festival, the cobalt market, which was originally a general downstream performance, seems to have opened the "holiday" stage in advance, the overall market transaction is light, and the spot quotation has entered a stable period...... However, despite this, the overall weak cobalt price in 2023 has forced Glencore, once the world's largest cobalt producer, to respond by lowering cobalt production.

According to the SMM spot quotation, the price of electrolytic cobalt this week was temporarily stable, the same as last week's price, and continued to remain at 20~240,000 yuan/ton, with an average price of 220,000 yuan/ton.
Specifically, the output of electrolytic cobalt on the supply side remains stable; On the demand side, due to the approaching Spring Festival, considering the logistics and transportation problems, the inquiry transaction of electrolytic cobalt market this week has weakened. It is expected that next week, under the influence of the approaching Spring Festival, the spot price of electrolytic cobalt will remain light, and the market price may still be stable. Cobalt salt (cobalt sulfate and cobalt chloride): In terms of cobalt sulfate, according to the SMM spot quotation, the price of cobalt sulfate this week remained stable compared with last week, as of February 2, the spot price of cobalt sulfate temporarily remained stable at 31,500~32,000 yuan/ton, and the average price was reported at 31,750 yuan/ton.
In terms of cobalt chloride, according to the SMM spot quotation, the spot price of cobalt chloride this week also remained stable before the Spring Festival holiday, as of February 2, the spot price of cobalt chloride remained stable at 39,000 ~ 40,000 yuan/ton, and the average price was reported at 39,500 yuan/ton. Specifically, on the supply side, due to the Spring Festival holiday and the weakening of market demand, cobalt salt smelters have reduced production to a certain extent, driving the supply of cobalt salt to decline; On the demand side, considering that the replenishment before the Spring Festival has been basically completed, new orders have declined this week, and the market inquiry transaction situation is relatively cold. Therefore, as the market trading sentiment weakened, cobalt salt prices stabilized this week. It is expected that in the later stage, although the market is still in a situation of weak supply and demand, considering that the holiday is approaching, the market trading atmosphere may further weaken, and the subsequent cobalt salt price is expected to continue to operate steadily. Cobalt tetroxide: According to the SMM spot quotation, the cobalt tetroxide spot price was also stable this week, with no significant fluctuations compared with last week, as of February 2, the cobalt tetroxide spot price remained at 13~133,000 yuan/ton, and the average price was reported at 131,500 yuan/ton.

From the perspective of supply and demand, on the supply side, the operating rate of smelters remained high due to the impact of delivery orders; However, the downstream demand side is showing a downward trend, the downstream replenishment in the early stage is basically completed, and the downstream purchase willingness is weak this week, driving the demand to decline. Therefore, from the perspective of the overall market situation, due to the low market activity this week, the price of cobalt tetroxide is temporarily stable. It is expected that next week, due to the approaching Spring Festival holiday, the market volatility may be small, and the price of cobalt tetroxide may remain stable. On the news side, mining and trading giant Glencore is lowering its cobalt production target for this year in response to the weak market environment. The company reported on Thursday that copper, nickel and cobalt production will decline in 2023 and warns of further reductions this year. According to the data, Glencore's cobalt production in 2023 will be 41,300 tons, and the company expects that the output in 2024 may be between 35,000~40,000 tons, a decrease of as much as 42% compared with the production target set in December 2023. In addition, the company expects that unsold cobalt stocks may push up the cost of copper production to some extent. Glencore's cobalt output of 43,000 tons in 2023 increased by 174% year-on-year to 55,500 tons compared with CMOC's previously released cobalt metal output, which also shows that the latter has successfully surpassed Glencore to become the world's largest cobalt producer. According to the historical price of SMM, the overall price of cobalt will show a downward trend in 2023 due to oversupply in the market, and the price will decline significantly compared with the same period in 2022. As of December 29, 2023, the average spot price of electrolytic cobalt was reported at 222,500 yuan/ton, a decrease of 100,500 yuan/ton or 31.11% compared with 323,000 yuan/ton at the end of 2022.

In terms of year-on-year, the average spot price of electrolytic cobalt in 2023 will be 271,500 yuan/ton, a decrease of 153,800 yuan/ton or 36.16% compared with the average spot price of electrolytic cobalt in 2022 of 425,300 yuan/ton. According to SMM research, the global cobalt market will accumulate in 2023, and the growth rate of supply will be greater than the growth rate of demand. On the supply side, in 2023, new production capacity such as Glencore, China Molybdenum and Indonesia nickel and cobalt projects will be launched, and the supply will increase; According to SMM statistics, the total global supply of cobalt raw materials in 2023 will be 246,500 metal tons, of which the total supply of raw materials will be 217,000 metal tons, mainly concentrated in the Democratic Republic of the Congo, Australia, Indonesia, Canada and other regions; However, on the demand side, the demand for alloys and magnets in the overall domestic market in 2023 will not increase as expected, resulting in the supply of electrolytic cobalt market far exceeding the demand, and the market has accumulated more inventory. Cobalt prices are in a downward channel as a whole in the case of oversupply. In addition, Reuters also reported that a Chinese construction company said on Saturday that it would invest up to $7 billion in infrastructure projects as part of its Sicomines copper-cobalt joint venture agreement in the Democratic Republic of Congo. Huagang Mining announced on January 27 on social media platform X that the DRC will receive $7 billion in infrastructure financing as part of a revised mineral and infrastructure contract signed with China. The amount of investment is mainly used for the construction of national highways. It is reported that Huagang Mining is an international copper and cobalt mining company integrating mining and metallurgy, and the mining project is constructed in two phases, and the first phase of the project will be completed and put into production in 2016; The second phase of the project was completed and put into operation in December 2021, with an annual output of 253,500 tons of copper metal and 5,180 tons of cobalt contained in crude cobalt hydroxide. Huagang Copper-Cobalt Mine Project is located in Kolwezi City, Lualaba Province, Democratic Republic of the Congo, with a mining area of about 11.05 square kilometers, ore reserves of about 250 million tons, copper ore grade of 3.47%, cobalt ore grade of 0.215%, and proven metal resource reserves of 8.68 million tons of copper and 540,000 tons of cobalt.