Chinese cobalt sulfate price surges to 26-month high on tight supply, raw materials strength

Cobalt sulfate prices in China hit a 26-month high on Wednesday January 27 against a backdrop of tight spot availability and strength in the upstream cobalt hydroxide market.

Fastmarkets’ price assessment for cobalt sulfate 20.5% Co basis, exw China rose to 70,000-74,000 yuan per tonne ($10,812-11,430) on Wednesday, up by 2,000-4,000 yuan per tonne (4.3%) from 68,000-70,000 yuan per tonne on January 22.

The battery raw material price is now at a level last reached in November 2018 after continuing to build upon the strong gains achieved since the beginning of the year.

Suppliers managed to conclude business at higher levels this week amid tight spot availability, which may not ease quickly even after the Chinese New Year holidays (February 11-17), market sources told Fastmarkets.

Sources said this is because smelters in China have been prioritizing production of cobalt chloride, the raw material needed to produce cobalt tetroxide, as opposed to sulfate due to the differing degrees of recovery in cobalt demand from the consumer electronics and electric vehicle (EV) sectors following the fallout of the Covid-19 pandemic in the country last year.

A quicker recovery in cobalt demand from the consumer electronics sector than that from the EV sector last year has led to a better price performance for cobalt chemicals that are used in consumer electronics batteries – including cobalt chloride and tetroxide – compared with cobalt sulfate, which is used to produce EV batteries.

As a result, some Chinese smelters have switched some of their operation lines for cobalt sulfate to chloride since the middle of last year, Fastmarkets heard.

But the rally in cobalt sulfate prices so far in January has taken place too quickly to allow these smelters to switch their operations back to sulfate production, especially with the Chinese New Year holidays just around the corner, market participants said.

“It usually takes about one to two weeks to change the operational lines [between different cobalt salts], therefore few smelters have the willingness to do that ahead of Chinese New Year,” a battery cathode materials producer source said.

Raw materials strength
In addition, cobalt sulfate suppliers refraining from making large sales in light of tight raw materials supply and rising costs for feedstock also contributed to the spot tightness in the cobalt sulfate market, prompting suppliers to raise their offers.

Fastmarkets’ cobalt hydroxide payable indicator, min 30% Co, cif China
rose to 89.50-92% against the standard-grade cobalt metal price (low end) on Wednesday, up from 89-91.50% on January 22.

Despite a continuous rally in the underlying benchmark metal price, some buyers in China still actively bid for cargoes with prompt delivery.

Fastmarkets’ price assessment for cobalt standard grade, in-whs Rotterdam was $18.50-19.30 per lb on Wednesday, up by $0.30-0.65 per lb (2.6%) from $18.20-18.65 per lb a day earlier. The price has risen continuously since January 4, when it was assessed at $15.35-16 per lb.

“Orders along the EV battery supply chain are pretty decent recently and the majority of battery materials producers are operating at full capacity,” a cobalt sulfate producer source said.