On September 23rd, the cobalt price was 280000 yuan/ton, which fluctuated and fell 8.53% compared to the cobalt price of 306100 yuan/ton on September 1st. In September, cobalt prices continued their volatile downward trend from August, and the cobalt market showed a weak pattern of unilateral decline and continuous downward shift in focus. In mid to late September, it temporarily gained support around 280000 yuan/ton, but trading remained light and did not receive any upward support.
MB cobalt price drops
In September, the international cobalt price of MB also fluctuated and weakened, with standard grade cobalt and alloy grade cobalt following the domestic spot price correction, and the price difference between domestic and foreign markets slightly narrowed.
Demand side: structural contraction coupled with sluggish peak season
According to data released by the China Automotive Power Battery Industry Innovation Alliance, in terms of installed capacity, in August, the domestic installed capacity of ternary batteries was 11.0 GWh, accounting for 14.0% of the total installed capacity, a month on month decrease of 1.0%, and a year-on-year increase of 0.9%; The installed capacity of ternary batteries has decreased compared to the previous month, and the demand for cobalt in the power battery market has decreased. In August, the production of ternary precursors only increased by 0.76% compared to the previous month, and the production schedule for September is expected to decrease by about 3% compared to the previous month. The quality of “golden nine and silver ten” is seriously insufficient.
Supply side: differentiation between policy shortage expectations and reality
The cobalt export quota system in the Democratic Republic of Congo has long been expected to shrink in supply, but the actual implementation of export measures is not as strong as expected. The quota for the first quarter has been postponed until the end of June, and the goods that enterprises are eager to export will be transported by sea to the port in August and September, quickly easing the domestic shortage of raw materials. Short term domestic inventory of raw materials and finished products is still being digested, and policy benefits have not yet been realized in September spot prices.
On September 11th, the Ministry of Industry and Information Technology and nine other departments jointly issued a document, clearly proposing to “coordinate the mining and recycling of key mineral resources such as lithium, cobalt, and nickel”. On September 21st, the Ministry of Industry and Information Technology released a draft for soliciting opinions on the standard system for the recycling and utilization of power batteries, defining the boundary rules for the secondary supply of cobalt. These policies are beneficial for the long-term supply chain security of cobalt, narrowing the expectation of supply shortage in the cobalt market and suppressing the rise in cobalt prices.
Market Overview and Future Outlook
Analysts believe that although the quota system in the Democratic Republic of Congo has compressed the export ceiling, mining production has not decreased, and the shortage of domestic raw materials has quickly eased after the rush to export goods are concentrated at the port; At the same time, the basic demand for cobalt continues to narrow, and the structural contraction on the demand side is intensifying. In the future, supply shortages cannot offset the structural contraction of demand, and cobalt prices lack clear unilateral drivers. It is expected that cobalt prices will maintain a weak and volatile pattern in the future.
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