In November, there was a noticeable improvement in cobalt’s end consumption, but the production of ternary materials, ternary precursors, and cobalt sulfate continued to contract. The industry chain actively promoted the de-stocking of raw material inventories, leading to a decline in cobalt prices to the historical bottom. The surplus situation of cobalt resources is expected to continue, but with further improvement in demand in the first quarter, there might be a periodic rebound in cobalt prices. Since mid-November, cobalt prices have been falling rapidly. On December 15, the price of electrolytic cobalt (cobalt ≥ 99.8%, average spot price in Shanghai non-ferrous market) closed at 213,500 RMB/ton, a decrease of 17.1% month-on-month; and the price of cobalt sulfate heptahydrate (cobalt ≥ 20.5%) closed at 31,100 RMB/ton, down by 15% month-on-month. Cobalt prices have generally fallen below the low of 2019, entering the historical absolute bottom area.
The end demand for ternary batteries has significantly improved. The market share of domestic ternary power batteries has rebounded noticeably. Since March 2020, due to the continuous encroachment by low-cost lithium iron phosphate batteries, the market share of ternary batteries has continually fallen from a high of 80% to slightly above 30%. In November, the production and installation of ternary batteries were 27.8GWh and 15.7GWh, respectively, with year-on-year increases of 19.6% and 42.4%, and month-on-month increases of 17.9% and 27.5%. The installation ratio of ternary batteries reached 35%, a month-on-month increase of about 4 percentage points. Additionally, in November, ternary battery exports were 8.2GWh, up 31.7% year-on-year and 10.8% month-on-month, accounting for 63% of the total power battery exports. From January to November, the cumulative production and installation of ternary batteries were 221.1GWh and 109.6GWh, up 13.9% and 10.7% year-on-year, respectively; the cumulative export volume was 77.3GWh, up 89.5% year-on-year.
Overall, in November, cobalt consumption in the new energy sector grew higher than expected. With the continued fall in nickel and cobalt prices, the cost gap between ternary batteries and lithium iron phosphate batteries narrowed further, highlighting the cost-effectiveness of ternary batteries. However, the production growth rate of ternary batteries did not keep up, with manufacturers mainly consuming previous inventories to meet the rising demand.
The production of ternary materials contracted significantly. According to SMM statistics, in November, China’s production of ternary precursors and ternary materials was 69,700 tons and 55,900 tons, respectively, a year-on-year decrease of 23% and 16%, and a month-on-month decrease of 5% and 0.3%. From January to November, the cumulative production of ternary precursors and ternary materials in China was 746,000 tons and 568,000 tons, down 4.1% and 13.3% year-on-year, respectively. It is evident that there was a significant accumulation of inventory earlier, and the industry chain is still accelerating de-stocking, with production significantly slowing down.
In November, the consumption in the lithium cobalt oxide battery field (mainly used in smartphones and high-end laptops) was sluggish, and lithium cobalt oxide production fell. According to SMM statistics, in November, China’s production of lithium cobalt oxide cathode material was 7,000 tons, down 2.8% year-on-year and 13.1% month-on-month. From January to November, the cumulative production of lithium cobalt oxide was 70,000 tons, down 1.7% year-on-year.
The supply of cobalt resources remains loose. The product supply of cobalt smelting enterprises further decreased. According to SMM statistics, in November 2023, the production of cobalt sulfate (as a raw material for the production of ternary precursors) was 5,700 tons, down 22.4% year-on-year and 9.4% month-on-month. From January to November, the cumulative production of cobalt sulfate was 75,700 tons, up 8.3% year-on-year. So far this year, the cumulative production of cobalt sulfate has increased significantly, with current production further contracting and actively de-stocking.
In November, the production of cobalt trioxide (as a raw material for lithium cobalt oxide) was 6,600 tons, up 18% year-on-year but down 17% month-on-month. From January to November, the cumulative production of cobalt trioxide was 70,000 tons, up 3.9% year-on-year. So far this year, the cumulative production of lithium cobalt oxide has decreased, and the cumulative production of cobalt trioxide has slightly risen, leading to an increase in inventory.
Regarding resource projects, the global supply of cobalt resources is generally loose. The largest increment in the Democratic Republic of the Congo (DRC) comes from Luoyang Molybdenum. In July, Luoyang Molybdenum reached an agreement with the DRC’s state-owned mining company on the TFM equity issue, and the restricted exports of the TFM project were resumed; in October, the mixed ore production line of the TFM project’s eastern area successfully carried out trial operation with materials, and it is expected to be fully completed and reach production within this year, with an expected additional annual production of about 200,000 tons of copper and 17,000 tons of cobalt. At the same time, the KFM copper-cobalt mine has been fully operational. According to Luoyang Molybdenum’s third-quarter report, the cobalt production of the TFM and KFM projects in the first three quarters was 37,000 tons, up 144% year-on-year; sales volume was 24,000 tons, up 95% year-on-year. The production capacities of projects like Indonesia’s Liqin Resources, Huayue Nickel Cobalt, and Qingmeibang are being released orderly, and Huayou Cobalt’s Huafei 120,000-ton nickel wet method project started trial operation in June.
Cobalt prices to bottom out and rebound in the first quarter Looking ahead, the end consumption of new energy vehicles will slow down, and the overall market share of ternary batteries will remain low. However, the slump in nickel and cobalt prices enhances the cost-effectiveness of ternary batteries. The market share of domestic ternary batteries is expected to remain above 30%, laying a good foundation for the growth of cobalt consumption in 2024. Considering the low base in the first quarter of this year, there will be no subsidy withdrawal disturbance in the first quarter of next year, and coupled with the adjustment of the “dual-credit” policy, it is expected that the sales of new energy vehicles and ternary batteries will achieve a year-on-year surge. The supply side of cobalt resources remains ample, especially as some major projects will further release capacity, and the surplus situation in the cobalt market is difficult to reverse in the short term.
In terms of market prices, as the current cobalt price is already at the absolute bottom of the market, there is limited room for further decline. It is expected that in the short term, cobalt prices will continue to fluctuate at the bottom, but with the improvement of end demand in the first quarter, cobalt prices may bottom out and rebound.
[Source – 上海有色网] 跌无可跌 钴价已跌至历史底部区域 https://news.smm.cn/news/102556435
