Chinese cobalt prices steady but vulnerable to post-holiday backswing
The prices for cobalt products in China were broadly steady on Wednesday January 23 on limited availability of prompt cargoes, but market participants are wary of price vulnerability after the Chinese New Year holiday on February 4-10.
Fastmarkets MB assessed the Chinese domestic min 99.8% Co price at 325,000-350,000 yuan per tonne ($18.72-20.16 per lb, less China VAT) on Wednesday, unchanged from the previous assessment on Friday.
Spot activity has slowed in the run up to the one-week holiday and the suspension of public logistics service from around February 25, according to market participants.
Meanwhile, suppliers have been reluctant to make spot offers or lower their quotations despite plummeting international cobalt prices, pointing to falling visible cobalt metal stocks which has strengthened market sentiment.
Stocks on the Wuxi Stainless Steel Exchange, a local Chinese cobalt metal trading platform, were at about 180 tonnes as of Wednesday, according to market participants. This compares with about 300 tonnes just before the New Year holiday on January 1.
“The availability is bit tight right now, and therefore some buyers are even willing to pay a premium of about 6,000 yuan for [certain brands] in order to get a prompt delivery from the exchange,” a trader said.
That said, some market participants’ outlook for the post-holiday market is less positive, citing large invisible stocks at refineries which are like to bog down the market.
Multiple market sources participants have estimated total stockpiles of 1,000 tonnes of cobalt metal stocks at several cobalt refineries in China, adding that the stocks will continue to rise since metal refineries will not stop operations during the Chinese New Year holiday.
“Some downstream consumers have stockpiled enough cobalt metal which may enable them to maintain normal operations for about one month. But upstream, refineries won’t halt production so there will be apparent increase on the availability following the holiday,” a second trader said.
“The fall in the international cobalt benchmark price is accelerating. We didn’t even see any struggle when it hit below the so-called psychological resistance level of $20 [per lb]. It is a bad signal for the domestic Chinese market,” he added.
The international cobalt price descent, which started in December, gathered pace after markets returned from the New Year holiday, with suppliers eager to destock amid limited buying appetite from consumers in Europe.
Fastmarkets MB assessed the price of standard-grade cobalt, in-warehouse Rotterdam at $19-21.40 per lb on Wednesday, down 25.7% from the end of December and 37.5% from the end of November. The latest price level is also at the lowest since February 2017.
Same price uncertainty lies with cobalt sulfate
The cobalt sulfate price has been steady recently, with increasing stockpiling activity in the spot market among some downstream producers wanting to secure materials for the production during Chinese New Year holiday and ahead of the termination of public logistics service.
However, similar to cobalt metal, market participants have concerns about the post-holiday buying interest.
Fastmarkets’ Chinese cobalt sulfate, Co 20.5% min, ex-works price was unchanged at 68,000-69,000 yuan per tonne on Wednesday. Meanwhile, spot quotations for material delivered around the end of February or in March were at about 65,000 yuan per tonne, according to market participants.
“Though some major battery producers won’t stop production during Chinese New Year holiday, some low-end manufacturers are planning to stop operations during this period, which means demand in general won’t pick up so quickly right after the one-week holiday,” a cobalt sulfate producer said.
“With stocks replenished in previous weeks, most downstream consumers could manage to operate without topping up raw materials until mid-February or even later than that,” he added.
“We haven’t received any inquiries for cargoes delivered in late February so far, and the spot market will be even quieter next week,” a second producer said.
Fastmarkets changed the names of its benchmark in-warehouse Rotterdam cobalt price assessments on January 2, 2019. The name “standard-grade” has replaced the name “low-grade.” The name “alloy-grade” has replaced the name “high-grade.” Click here for further details about the name changes and consultation process.