Potential China SRB tender helps stabilize falling Rotterdam cobalt prices

Market sources reported that China’s State Reserve Bureau (SRB) is planning to stockpile cobalt metal, which limited cheaper export offers from the country and helped stabilize international cobalt prices on Tuesday August 9

Several market sources told Fastmarkets that the SRB was circulating invitations for an upcoming meeting to find sourcing agents, which supported global sentiment.

The National Food and Strategic Reserves Administration, which overlooks the State Reserves Bureau, did not respond to Fastmarkets’ request for confirmation and comment at the time of publication.

Fastmarkets’ daily price assessment for cobalt standard grade, in-whs Rotterdam was $23.60-25.25 per lb on August 9, unchanged from the previous session.

Market participants said the chatter about the potential stockpiling has led to fewer cheap offers out of China, which had been one of the main factors pressuring cobalt prices down in the international market.

The stable Rotterdam price follows several month-long cobalt price downtrends, which were caused by a collapse of demand that stemmed from strict Covid-19 lockdown measures in key manufacturing provinces across China earlier this year.

Initial talks of a potential tender began circulating in the market following a 12-percentage-point rise in the nearby cobalt metal futures contract on the Wuxi Stainless Steel Exchange on Monday August 8. The contract opened at 300,000 yuan ($44,427.33) per tonne on Monday and reached over 330,000 yuan per tonne at its peak in the day’s trading.

“[The rise] surprised all of us. Some talks said this was attributed to the SRB rumor for purchasing cobalt metal, but currently there is no confirmed news,” an Asia-based trader said.

Some market participants also attributed the jump on the exchange to power cuts across the region, which are expected to tighten supply if prolonged.

Specific volumes are unclear at this stage, but several market participants have said the SRB will potentially stockpile around 2,500 tonnes, with other participants saying they expect a multi-phased purchasing plan.

There is also no insight on what kind of pricing mechanism the SRB will be using if it goes through with the tender.

“I think eventually sooner than later, the SRB [news] will have an impact on Europe, for the time being, a lot of people are seeing it as an announcement effect, and it’ll generate a bounce back” a European trader said.

Based on past tenders, SRB usually opts for cathode material, including both cut and broken cathode, with Chinese brands the only purchase option and state-owned enterprises the only approved participants according to market sources.

A second European trader noted that cheaper units on offer in China have disappeared in the last couple days after talks of a potential SRB tender surfaced.

“This could be the start of something exciting. Now seeing the Chinese low offers all disappear is what the market needed to start any sort of recovery,” the second trader said.

“It’ll act as a floor, and it will stop the Chinese from offering [metal for export],” the source added.

Some said they expect further confirmation that the government is going to stockpile cobalt before there is any pronounced global effect on prices.

“There’s definitely a lot of talk, but there’s not much info yet. It’s positive for the sentiment, but it’s not a direct impact on the international price,” a third trader said.

Some market participants said downstream cobalt demand in China is weak enough to offset any large rise in prices.

Cobalt metal prices have been supported due to the sudden rise of prices on China’s exchange, but whether it will keep the upward trend for longer period, I am still holding watchful attitudes as current cobalt [sulfate] sector is still weak due to thin buying,” a Chinese consumer said.

This would mark the first cobalt purchase by the SRB since purchase rumors circulated in December 2020. Before this, the two previous purchases were in September 2020 and February 2016.

What to read next
The key discussion topics across the battery raw materials sector ahead of Fastmarkets' Asian Battery Raw Materials conference taking place in Seoul on April 22-23
Cobalt standard grade prices were stable in the week ended Friday April 5, due to poor demand for cobalt intermediates following price increases in early February amid tight supply in Europe.
After a consultation period, Fastmarkets has amended the MB-CO-0004 cobalt alloy grade and MB-CO-0005 cobalt standard grade prices.
The publication of Fastmarkets’ cobalt hydroxide payable indicator, min 30% Co, cif China, % payable of Fastmarkets’ standard-grade cobalt price (low-end) assessments and cobalt hydroxide, min 30% Co, inferred, China, $/Ib for Friday March 8 were delayed because of technical issues. Fastmarkets’ pricing database has been updated.
TMP Holdings is harnessing the power of critical metals like nickel and cobalt to fuel Saudi Arabia's ambitious infrastructure and decarbonization initiatives
After market feedback, Fastmarkets is extending the consultation period for its proposal to increase and realign its listed brands for MB-CO-0005 cobalt standard grade, in-whs Rotterdam and MB-CO-0004 cobalt alloy grade, in-whs Rotterdam assessments.