The boom in cobalt scrap demand has come at a time when cobalt prices have almost doubled in a year due to a bullish outlook on electric vehicles (EVs) consumption.
Cobalt is one of the key components of lithium-ion batteries used by EVs.
Metal Bulletin’s benchmark low-grade cobalt price stood at $43.20-43.85 per lb on Friday May 11, up about 74% from a year ago.
The recent acceleration in the rally in March sent cobalt prices close to the historical high of $48.25-49 per lb recorded in March 2008.
With rising cobalt raw material import costs, some cobalt producers have been considering the recycling of cobalt scrap to maintain profit margins. The lower raw material costs involved in the production of cobalt sulfate fed on scrap has consequently put pressure on overall spot prices, sources said.
Traditionally, import costs for cobalt raw materials, such as cobalt ores and concentrates, and cobalt intermediates of which crude cobalt hydroxide is typical, are based on a payable percentage against Metal Bulletin’s low-grade cobalt price.
“Producers on the supply chain, including cobalt producers, lithium-ion cathode producers, and battery manufacturers, all generate cobalt scrap from time to time. In the past, no one cared about collecting or recycling those scraps. But faced with such high cobalt prices, people are searching from corner to corner for cobalt scrap,” a cathode materials producer said.
Cobalt scrap currently available in China mainly include leftover cobalt metal, unqualified lithium-ion cathodes, and leftover ternary precursor materials, according market participants. But it will take quite some time for the market to fully embrace EV battery recycling in China, sources added.
“Battery manufacturers and cobalt producers hold quite good volumes of cobalt scrap stocks which they haven’t dealt with in the past few years,” the cathode materials producers said.
“If a precursor or cathode materials producer generates 100 tonnes per year of cobalt scrap and you consider how many those producers are in China, that is a significant number,” he added.
“Currently about 500 tonnes per month of cobalt scrap is being used to produce cobalt salts, including cobalt sulfate,” a trader said.
There is little difference in quality between in the cobalt sulfate produced from scrap and from ores and concentrates or intermediates, but quotations for the former are lower because of the cheaper raw materials costs, market participants reported.
Although some cathode materials producers favor materials produced by large refineries who feed more frequently on cobalt concentrates and intermediates, the lower quotations for materials produced from scrap has started to bring overall spot prices down.
Metal Bulletin cobalt sulfate, 20.5% min, ex-works China price, was assessed at a discount of $0.83-1.20 per lb on May 11, widening from $0.74-1.05 per lb previously.
Mainstream quotations and deal prices for cobalt sulfate produced from regular feed were around 125,000-131,000 yuan ($19,623-20,565) per tonne in the spot market, while cobalt sulfate fed by scraps are offered at the low 120,000 yuan per tonne level, according to market participants.
“Cobalt sulfate produced from scraps only accounts for a small proportion of material available in the spot market, and does not reflect where the true market is; however, those cheap materials did succeed in winding down the market,” a second cathode materials producer said.
The sharp rally in cobalt prices over the past two years has accelerated the adoption of cobalt scrap in the production of cobalt metal and salts, including cobalt sulfate, Chinese market participants told Metal Bulletin.