Chinese cobalt tetroxide, sulfate prices trend lower on sluggish demand; spot raw materials prices under pressure

Both Chinese cobalt tetroxide and sulfate spot prices edged down on Wednesday July 12 due to seasonal low consumption, with some refineries lowering their offer prices to secure sales despite high raw material costs.

Metal Bulletin’s China cobalt tetroxide spot price dropped to 390,000-420,000 yuan ($58,492-62,992) per tonne during the midweek session, down 2.4% from 400,000-430,000 yuan per tonne on July 6.

Major refineries still intend to hold quotations above 400,000 yuan per tonne while some suppliers have offered cobalt tetroxide as low as 380,000 yuan per tonne to consumers who would otherwise have no interest in procurement.

“The quotations for [chemical compound] lithium cobalt oxide have dipped to 400,000 yuan per tonne, how could cobalt tetroxide prices hold steady?” a consumer said.

Cobalt tetroxide is the raw material used to produce lithium cobalt oxide, the precursor material for lithium-ion batteries used in computers as well as communication and consumer electronics.

Weak prices are expected to last through summer due to lower consumption. Purchasing usually picks up in September and October when electronic products manufacturers have greater demand for batteries for products sold during China’s National holiday and New Year holiday.

Meanwhile, the termination of the manufacturer subsidy for electric vehicles (EVs) with a driving range below 150km has cut buying appetite for cobalt sulfate. As a result, spot prices have dropped week on week.

Metal Bulletin’s Chinese cobalt sulfate, Co 20.5% min, China ex-works price, calculated as an adjustment to existing low-grade cobalt low-end benchmark at Co 20.5% basis, was assessed at a discount of $1.23-1.52 per lb on July 11, widening from a discount of $1.51-1.21 per lb last Friday.

Mainstream spot quotations and sales took place at a range of 108,000-113,000 yuan per tonne, according to data collected by Metal Bulletin.

“If cobalt sulfate prices keep falling, some refineries may choose to curb production in order to avoid losing money,” a producer indicated.

Spot raw materials prices under pressure
Chinese refineries, facing tight credit lines, are not showing much interest in buying cobalt raw materials, including cobalt ores and concentrates, as well as cobalt intermediates. Refineries cited the sharp drops in cobalt salts prices, including cobalt tetroxide and sulfate, in the past month and weakening downstream consumption.

As a result, payables percentages for spot cobalt raw materials have fallen quickly.

Traditionally, cobalt raw materials are sold at payable percentages on top of Metal Bulletin’s low-grade cobalt price assessments.

Payable percentages for cobalt intermediates containing 20-30% cobalt have remained at 70-75%, compared with over 80% in the first quarter of this year, according to market participants.

Spot quotations for cobalt ores and concentrates have also dipped to around 65% on top of Metal Bulletin low-grade cobalt benchmark from over 70% during earlier this year.

“Most refineries in China have financial constraints and tight credit lines, and they are reluctant to even keep normal operational rates amid falling cobalt prices; in addition, there are abundant supplies of cheaper cobalt scrap [which can be substituted for cobalt raw materials],” a trader said.

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