Has improved demand caused China’s cobalt sulfate price to hit a three-year high?

China’s cobalt sulfate prices surged to a three-year high, supported by increasing downstream demand and tight upstream cobalt hydroxide supply

Fastmarkets’ price assessment for cobalt sulfate 20.5% Co basis, exw China rose to 111,000-113,000 yuan per tonne ($17,523-17,839) on Wednesday February 16, up by 1,000 yuan per tonne from 110,000-112,000 yuan per tonne on February 11, marking the highest level since July 2018.

Cobalt sulfate sellers in China succeeded in concluding business at higher levels this week on the back of downstream demand. Sentiment strengthened further on rising production costs driven by rising upstream raw materials costs.

“Downstream buyers booked large volumes of cobalt sulfate ahead of China’s Lunar New Year, and restocking continues this week as some buyers are fearing further increases, considering higher production costs,” a producer told Fastmarkets.

“Some small-sized producers have basically no availability for cobalt sulfate, and other bigger producers insist on higher prices above 110,000 yuan per tonne,” a buyer said. “I heard there are even offers at 115,000 yuan per tonne for cobalt sulfate, but I currently haven’t heard real deals at such a high level.”

Some market participants were still cautious, opting to keep a watchful attitude on the market. But others said they think the short-term market will keep strengthening, given that the upstream cobalt hydroxide tension has not yet fully released.

Raw materials supply tight, shipment delays not significantly eased

Cobalt hydroxide, which is mined and produced in the Democratic Republic of Congo (DRC) and often transported to and shipped out of South Africa, has continued to face slow land delivery, container supply issues and delayed shipments, all of which have tightened the raw material supply.

Fastmarkets’ cobalt hydroxide payable indicator, min 30% Co, cif China was at 88-90% against the standard-grade cobalt metal price (low end) on Wednesday February 16, unchanged since December 8, 2021. It lingered around this high level throughout most of 2021.

The continuous rally in the benchmark metal price has also affected China’s cobalt sulfate market, prompting sellers to keep increasing offers.

Fastmarkets’ price assessment for cobalt standard grade, in-whs Rotterdam was $34.75-35.10 per lb on Wednesday February 17, up by $0.05 per lb from $34.70-35.10 per lb a day earlier. The price has also risen to its highest level since August 2018, when prices stood at similar levels at $34.75-36.00 per Ib.

Under normal conditions, land delivery by truck from DRC to the Durban port in South Africa usually took less than 20 days, market sources told Fastmarkets. But now deliveries are taking 30 days or more. A scarcity of containers and delayed shipments have made the whole process even longer, they said.

“I don’t think the logistics issues from South Africa to China will ease in the first quarter or even the first half of 2022,” a cobalt hydroxide supplier said.

Moreover, some suppliers who were previously able to use general cargo through some shipping companies to deliver cobalt hydroxide have met with declarations problems when entering China during the Lunar New Year period. Some cargoes were being flagged for delivering dangerous materials and were required to book their cargoes as such.

Cobalt hydroxide belongs to category 9 in the International Maritime Dangerous Goods (IMDG) code, which categorizes it as a dangerous material for sea transportation, sources said.

“We heard that a batch of cobalt hydroxide met with declarations problems as some shipping companies, which could deliver it in general cargo before, were required to use dangerous material cargo from now on,” a second supplier said. “This will cause further tension on shipments as dangerous material cargos are very hard to book, and fees are much higher compared with general ones.”

Some market participants said this is not likely to have a major impact, given that there are suppliers who already deliver cobalt hydroxide as a dangerous material during sea transportation.

Others, however, said this will likely put pressure on an already tense shipping situation.

Keep up with what’s happening in the cobalt market throughout 2022, visit our dedicated cobalt market page.

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