Cobalt intermediates prices likely to break support
创建于02.24
Cobalt intermediates prices likely to break support
China's cobalt salts (cobalt sulfate and cobalt chloride) market is expected to remain challenged by weakening cost support and poor demand when the end-market demand is likely to bring surprises, while the cobalt raw material supply in the Democratic Republic of Congo (DRC) is projected to sustain.
China's cobalt salts (cobalt sulfate and cobalt chloride) market is expected to remain challenged by weakening cost support and poor demand when the end-market demand is unlikely to bring surprises, while the cobalt raw material supply in the Democratic Republic of Congo (DRC) is projected to sustain.
Cost
Although the cobalt production in DRC hit the ceiling in 2024, the local mining companies such as Glencore are expected to sustain the production in 2025 based on the available news, which is contrary to previous expectations in early 2025. In addition, the conflict between the DRC and Rwanda has not affected the exports of cobalt raw materials as of now, but the market players stay wait-and-see towards the pollical environment in the DRC.
In this case, the cobalt salts producers are not in a hurry to build raw material stocks on the backdrop that the raw materials supply in the DRC is sufficient, especially when the plants' profitability has been disappointing. Recent survey showed that the transactions in China and the European market have been both lackluster, with standard grade cobalt transacted at US$ 9.5/pound.
The cobalt salts plants have been trying to force down cobalt intermediates prices to US$ 5.5/pound or low, the bottom price set in long-term orders, in order to grab some profits. Nevertheless, the sellers are trying not to give in so early and have maintained the prices at US$ 5.6/pound. Therefore, it is expected that there will be a more intense tug-of-war between the two sides in the future.
According to Mysteel's calculation, the cost of cobalt sulfate and cobalt chloride is Yuan 26,775/tonne and Yuan 31,607/tonne respectively based on the cobalt intermediate price of US$ 5.6/pound and a conversion margin of Yuan 28,000/tonne. When Mysteel's price assessment shows that cobalt sulfate and cobalt chloride spot prices are between Yuan 26,000-26,500/tonne and Yuan 31,000-32,000/tonne respectively, the cobalt sulfate producers suffer losses still while the chloride producers could merely break even.
Demand
On the demand end, the demand for ternary precursors has been persistently poor partly due to the slowing growth of electric vehicles. Moreover, the technology route transition towards low cobalt or cobalt free will gradually reduce the dependence on cobalt. And the high-nickel ternary battery and LFP battery are grabbing the majority of the market share. Lastly, though the government's trade-in policy has revived the demand, the LCO market has failed to see an outbreak on the demand end.
In combination with the standing losses of cobalt sulfate, some small and medium-sized plants have reduced or even suspended the production.
In January 2025, China's cobalt sulfate production was 19,973 tonnes, a decrease of 0.19% month on month and 27.53% year-on-year, according to Mysteel survey. As for cobalt chloride, the production reached 17,377 tonnes, a decrease of 12.91% compared to the previous month, which was up 14.63% YoY.
Summary
It is almost certain that the cobalt chemicals market will extend the weakness in 2025, with significant price pressure from the sustained production in DRC and slowing demand.
Assuming that the cobalt intermediates prices stay above the bottom line, the cobalt sulfate and chloride prices will gain certain momentum. However, the persistently soft demand will keep weighing on the intermediates prices, aggravating the wrestling between upstream and downstream players.
When the cobalt raw material supply in DRC is sustained despite pollical uncertainties and the demand end lacks driving forces, the small and medium-sized producers are likely to withdraw from the market. Technology development and cost control will likely help the producers survive the "long cold winter". Meanwhile, market players need to pay attention to the recycling system that may re-shape the market's supply and demand structure.