Cobalt sulfate is one of the key materials used to produce lithium-ion nickel-cobalt-manganese (NCM) and nickel-cobalt-aluminium (NCA) batteries used in electric vehicles (EV).

China is the largest cobalt sulfate producer in the world, and is expected to ramp up its cobalt sulfate production in the next few decades with rising demand from the EV sector.

Metal Bulletin’s low-grade cobalt price assessment has typically been used as the benchmark by Chinese cobalt producers to calculate cobalt raw materials import costs, as a basis for long-term contracts and to make offers to consumers.

But following an initial consultation with the market, it has become clear that there is a vibrant, fixed-price spot market for cobalt sulfate and that most market participants are calculating and negotiating cobalt sulfate prices to take account of refineries’ other production costs, including treatment charges and other raw materials costs.

Therefore, Metal Bulletin intends to provide a regular tracker of China cobalt sulfate price on a spot basis, published as an adjustment to the low end of Metal Bulletin’s low-grade cobalt price, basis 20.5% cobalt content.

Metal Bulletin is seeking feedback from those active in the cobalt sulfate market on the proposed price specification detailed below.

The consultation period for this proposed price launch will end one month from the date of this pricing notice, on April 27, 2018. 
 
The specification, delivery terms and publication timing have been devised following an initial consultation with the market, and are as follows:

Price: China cobalt sulfate, Co 20.5% min, ex-works, adjustment to low-grade cobalt low-end price at Co 20.5% basis, $/lb
Type:
assessed range
Currency/unit: USD per lb
Quality/shape: crystal
Chemical specification: Co: 20.5% min, Ni: 0.001% max, Cu: 0.001% max, Fe: 0.001% max, Zn: 0.001% max
Lot size: one tonne
Payment terms: on bank acceptance (other payment normalized)
Delivery window: within 30 days
Publication: twice a week on Wednesday and Friday, between 2pm and 3pm London time

To calculate the adjustment, spot cobalt sulfate data will be collected in yuan per tonne and Metal Bulletin will use the US dollar sell price published by the Bank of China every Wednesday and Friday at about 3pm Shanghai time. 

The formula to calculate the adjustment is as follows:

    a. China cobalt sulfate price/1.17/forex rate/2,204.62 = China cobalt sulfate, ex-works, $/lb 
    b. Metal Bulletin low-grade low-end price x 0.205 = Metal Bulletin low-grade cobalt low-end price at Co 20.5% basis, $/lb

    Final premium/discount, $/lb = a-b

For example, on Friday March 23, cobalt sulfate prices were indicated at 138,000-145,000 yuan per tonne, ex works China, and low-grade cobalt prices were assessed at $41.95-43.75 per lb, in-warehouse. The formula for calculating the cobalt sulfate premium/discount would read as follows:

(138,000/1.17/6.3384/2,204.62) - (41.95*0.205) and (145,000/1.17/6.3384/2,204.62) - (41.95*0.205) = a differential between a discount of $0.16 per lb to a premium of $0.27 per lb.

In the context of growing scrutiny around the cobalt supply chain, please note that Metal Bulletin and Euromoney plc are committed to the Modern Slavery Act.

The Metal Bulletin team will continue to monitor changes in market structure - including any shift to pricing on the midpoint of the low-grade assessment, for example - and will adjust its formula accordingly in consultation with the market.

Subject to market feedback, the new assessment will follow the same publication calendar as Metal Bulletin’s benchmark cobalt price assessments, starting on Wednesday May 2, 2018.

To provide feedback on this price or if you would like to provide price information by becoming a data submitter, please contact Susan Zou or Charlotte Radford by email at: pricing@metalbulletin.com. Please add the subject heading 'FAO: Susan Zou/Charlotte Radford, re: China cobalt sulfate price assessment.'

Metal Bulletin is also consulting on possible changes to its benchmark cobalt metal price assessments, and will provide due notice should these changes affect the calculation of the cobalt sulfate price adjustment.

To see all Metal Bulletin’s pricing methodology and specification documents go to https://www.metalbulletin.com/prices/pricing-methodology.html