China’s cobalt metal price continues uptrend on tight spot availability

The cobalt metal price in China maintained an uptrend in week to Wednesday March 9, driven mainly by the tightness in the spot market, while downstream demand continued to be weak

Fastmarkets’ price assessment for cobalt 99.8% Co min, ex-works China was 290,000-342,000 yuan ($41,656-49,125) per tonne on Wednesday, widening upward by 12,000 yuan from 290,000-330,000 yuan per tonne on March 3. The latest assessment is also up by 10,000-32,000 yuan from 280,000-320,000 yuan per tonne on February 17, when the uptrend started.

Market participants noted that many cobalt metal producers had already locked in much of their supply under long-term agreements with both domestic Chinese and international customers, leaving them with limited availability for the spot market.

“Certain brands are extremely tight in the spot market, since they are tied up with long-term deliveries, which supports spot cobalt metal prices,” a cobalt trader said.

Fastmarkets has also learned that some cobalt producers have been purchasing cobalt metal of other brands in both Chinese and international markets to fulfil their long-term agreements, or postponing their scheduled deliveries, since they could not deliver those orders with their own output in time.

Elsewhere, lost production from Chinese cobalt producer GEM between January 5 and February 25 following a fire at its Jiangsu plant has further intensified tightness in China’s spot cobalt metal market.

GEM was forced to suspend cobalt metal production at its Jiangsu plant on January 5 and resumed production 31 days later, Fastmarkets reported previously. The plant’s cobalt metal output was 250 tonnes per month prior to the fire, according to a company source.

“It’s not only spot market inventory that is tight. Bonded warehouses in China have very limited stock,” a second cobalt trader said.

However, despite tighter spot supply, market participants continued to report sluggish demand with no signs of any improvement.

“The downstream magnetic sector has almost no demand for cobalt metal,” the first cobalt trader said.

A third cobalt trader said: “Downstream consumers are only topping up their inventories of cobalt metal at very small volumes each time, and it has been like this since last year.”

Given the sluggish demand, which market participants expect to persist in the near future, the current upward momentum in China’s cobalt metal prices may vanish when spot market availability improves, market participants said.

“The current upward moment is not supported by strong consumer demand. So it will end once the cobalt metal producers can free up some of their output for the spot market. Then cobalt metal prices in China may start to soften,” the first cobalt trader added.

The general cobalt metal price trend in China was weak between late October and mid-February, pressured down by limited buying appetite among downstream consumers who had been purchasing spot units only on a hand-to-mouth basis. Fastmarkets assessed the cobalt 99.8% Co min, ex-works China price at 342,000-357,000 yuan per tonne on October 28, 2022.

Depressed prices in the international cobalt metal market during the same period between October 2022 and February this year also contributed to decreases in Chinese cobalt metal prices at the time.

Fastmarkets’ daily price assessment for cobalt, standard grade, in-whs Rotterdam was $15.50-17.00 per lb on Wednesday, narrowing upward by $0.15 per lb from $15.35-17.40 per lb on Tuesday.

The price dropped to $15.00-16.25 per lb on February 20 from $25.70-26.40 per lb on October 12.

Keep up to date with the latest news and insights on our cobalt market page.

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