Chinese cobalt metal price drops on lower offers for imported material; sulfate price trends lower

A lack of demand for imported cobalt material weighed on the Chinese domestic cobalt metal price last week, while the price for cobalt salts widened downward on lower offer prices in a weak market.

Fastmarkets assessed the Chinese domestic cobalt metal price at 445,000-465,000 yuan per tonne ($25.07-26.20 per lb) on Friday October 26, down 2.2% from 450,000-480,000 yuan per tonne during the midweek assessment.

Spot offer and sales prices for the Jinchuan brand of cobalt were at about 445,000-460,000 yuan per tonne, compared with about 450,000-460,000 yuan per tonne one week ago. Meanwhile, spot quotations for imported metal, such as the Chambishi brand, fell by 4.64% to around 460,000-465,000 yuan per tonne on Friday from about 480,000-490,000 yuan per tonne one week earlier.

Buying appetite for imported metal has dropped in the past year, forcing suppliers to either lower their spot quotations to secure sales or export their material to the international market.

“As [Fastmarkets’] low-grade cobalt price had climbed up quickly since the end of last year [to mid-2018], quite a few consumers who fed on imported cobalt metal started to change feedstock produced in China in order to cut production costs,” a cobalt trader said.

Unlike prices for metal produced in China, spot offer prices for imported metal are more closely linked to Fastmarkets’ low-grade cobalt assessment, which is the benchmark specified in long-term contracts between Chinese importers and overseas suppliers.

“Nowadays, consumers who are able to change feedstock have mostly completed changes in their processing techniques, which enable them to feed on Chinese produced cobalt metal,” the same trader said.

“There are only a limited number of consumers who don’t have flexibility to produce from Chinese produced cobalt metal. Therefore, the market share for imported cobalt metal has shrunk rapidly in the past few months,” he added.

In general, weakened sentiment continues to weigh on the blue metal prices in the domestic Chinese market.

“Local futures prices plummeted again on Friday after stabilizing for couple of days. As a result, consumers started to take a watchful stance again,” a second trader said.

On top of that, Chinese produced cobalt metal which has failed to be exported out of China in recent weeks due to low spot activity in the international market has returned to the domestic market, adding to more supply in the spot market.

Spot activity outside China has been slow since the start of October, evident by the barely changed low-grade cobalt prices in the past four weeks.

Fastmakets assessed the low-grade cobalt benchmark at $33.50-34.45 per lb on Friday, unchanged from the previous pricing session, and up only 5 cents on high-end from the assessment one week earlier which had been steady since October 10.

“Some Chinese produced cobalt metal brands are difficult to export these days, so [suppliers] are eyeing on local consumers [again],” a third trader said.

Cobalt sulfate price vulnerable to further downswing
The Chinese cobalt sulfate price inched lower last week, with most market participants expecting further downside as a result of weak demand.

Fastmakets’ Chinese cobalt sulfate price fell to 86,000-89,000 yuan per tonne on Friday, down 1.7% from 87,000-91,000 yuan per tonne midweek. Its adjustment to Fastmarkets’ low-grade cobalt low end price was assessed at a discount at $1.88-2.05 per lb, widening from $1.75-1.98 per lb previously.

Persistent weak demand has forced major suppliers to lower spot offer prices to consumers who would otherwise not be interested in purchasing large quantities.

Offers slightly below 85,000 yuan per tonne were heard made by smaller producers or producers feeding on scraps, Fastmarkets learned.

“We are offering at 86,000 yuan per tonne this week, but consumers are still not interested in buying anything, and they didn’t even bargain with us,” a cobalt salts producer said.

“November is a month when both producers and consumers have to pay back credit lines. Everyone is just short of money,” a consumer said.