China’s cobalt metal prices increase on futures strength

China’s cobalt metal prices rose in the second half of the week to Friday February 3 due to the strength in local futures prices, but market sentiment remained bearish due to sustained weak demand, sources told Fastmarkets

Fastmarkets’ assessment of cobalt 99.8% Co min, ex-works China was 280,000-323,000 yuan ($41,322-47,668) per tonne on Friday, up by 3,000-5,000 yuan per tonne from 275,000-320,000 yuan per tonne.

The February cobalt contract on China’s Liyang E-Commerce Platform rose to as high as 290,000 yuan per tonne on Wednesday February 1 after opening at 271,000 yuan per tonne on the same day. On February 2, the highest contract price reached 282,500 yuan per tonne, before closing at 274,000 yuan per tonne.

“China’s cobalt metal prices are closely linked to the cobalt contract prices on the Liyang E-Commerce Platform, so the strength seen in the contract on Wednesday and Thursday supported spot prices,” a cobalt trader said.

Despite the support from futures prices, there was no change in market conditions amid ongoing demand weakness weak and bearish sentiment. Therefore, market participants do not expect a long-lived uptrend in cobalt prices, sources said.

“There was nothing extraordinary about the number of deals concluded in the second half of the week, given that demand was just as sluggish as it was before,” a second cobalt trader said. “The rise in the February cobalt contract prices did nothing to improve market sentiment.”

Market participants said the weak demand was the key factor that limit any further upward potential in the cobalt metal prices, even though current spot supply was reported tight.

“Most cobalt output is tied up in long-term deliveries and export contracts. In addition, GEM Jiangsu’s recent fire has also reduced cobalt output, so spot supply is tight,” a third cobalt trader said, adding that the spot tightness is not supporting prices due to weak demand.

However, in the longer term, some market participants were speaking of a surplus in the global cobalt market in 2023. With the removal of China’s import tariff on cobalt metal from 2023, China’s cobalt metal market is likely to experience undersupply in 2023, sources said.

“While cobalt metal supply in 2023 looks sufficient, the weakness in demand may persist. The market therefore still looks bearish despite current tightness in the spot market,” the first cobalt trader said.

Fastmarkets research forecasts that cobalt demand should increase to 194,000 tonnes in 2023, from an estimated 177,000 tonnes in 2022. But total cobalt supply is also forecast to increase, up to 209,000 tonnes from an estimated 182,000 tonnes in 2022, leaving a surplus of 15,000 tonnes in 2023.

“The futures prices of cobalt metal contracts on China’s Liyang Zhonglianjin E-Commerce platform are in a backwardation for the months between February and June. This reflects the bearish outlook in the market,” the third cobalt trade said.

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

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