【SMM Cobalt and Lithium Morning Meeting Summary】LCO Producers' Purchase Willingness Below Expectations With Limited Acceptance of High Co3O4 Prices

Lithium Ore: This week, the CIF price of spodumene WoW showed a significant decline. The continuous downward trend in lithium carbonate prices, coupled with the pressure from downstream buyers to lower prices, led some traders who had previously stockpiled at high prices to sell off their inventory at reduced prices, thereby driving down the overall market price. Domestic lithium ore mainly comes from Africa, and recent supply has been limited, keeping prices relatively stable, with 5% grade ore trading at 1,060-1,150 yuan/mtu. On the day when lithium carbonate prices dropped sharply, sellers were more inclined to hold firm on quotes and did not significantly lower prices in line with the sharp drop in lithium chemical prices. In terms of lepidolite, the auction prices for two batches last week remained at high levels, further boosting the sentiment among other traders to raise prices. Some demand-side players, after hedging at higher prices earlier, have a need to maintain production schedules for delivery, thus showing some willingness to purchase. Coupled with the undersupply situation in the lepidolite market, prices remain at a relatively high level. It is expected that lithium ore prices will continue to fall in tandem with lithium carbonate prices in the short term. Lithium Carbonate: This week, the transaction price center of spot lithium carbonate shifted significantly downward. Compared to last week, the decline was around 500 yuan/mt. As the sentiment of weaker-than-expected downstream demand gradually intensified, along with a still robust supply, lithium carbonate continued to build up inventory. With the surplus situation persisting, spot lithium carbonate prices kept falling. From this week's market transactions, it is evident that downstream material plants increased their purchases over the past few days, slightly raising their inventory cycle to about 13 days. The continuous price decline has led some lithium chemical plants with high costs to cut production, but the reduction is relatively limited, and domestic lithium carbonate production remains at a high level. Given the difficulty in changing the oversupply situation of lithium carbonate and the expectation that downstream production may fall short of previous forecasts, it is anticipated that spot lithium carbonate prices will continue to show a downward trend, accompanied by rangebound fluctuations. Lithium Hydroxide: This week, lithium hydroxide prices maintained the slight downward trend from last week. On the demand side, a small number of ternary cathode material producers reported some spot order pick-up needs during production, with transaction prices remaining at a relatively high level due to large volumes and the upstream's firm pricing stance. Other downstream ternary cathode material plants showed little interest in purchasing large spot orders, with their psychological price levels continuously declining, influenced by pessimistic future expectations and reduced purchase demand. In terms of import and export, the volume from January to February hit a new low. Specifically, exports in January amounted to 3,220 mt, down 54% MoM, with 2,313 mt exported to South Korea, down 54% MoM, and 632 mt to Japan, down 61% MoM; in February, total exports reached 4,324 mt, up 34%, with 2,751 mt to South Korea, up 18.91%, and 1,350 mt to Japan, up 113% MoM. Refined Cobalt: This week, the spot price of refined cobalt fell. From the supply side, the supply of refined cobalt was relatively sufficient, but smelters' profits declined due to high raw material prices, leading to a decrease in their willingness to sell. On the demand side, downstream inquiries were somewhat weak, and overseas trading sentiment cooled, causing a pullback in export prices. It is expected that the spot price of refined cobalt will continue to weaken next week. Intermediate Products: This week, the spot price of cobalt intermediate products rose slightly as the market continued to digest the impact of the DRC export ban. From the supply side, some top-tier enterprises began to fulfill long-term contracts using inventory, with a low proportion of spot orders, keeping market circulation at a low level. On the demand side, processing fees for downstream salt plants decreased, slightly reducing their purchasing enthusiasm. Next week, it is expected that downstream enterprises will gradually start restocking, and the price of cobalt intermediate products may remain stable. Cobalt Salts (Cobalt Sulphate and Cobalt Chloride): This week, the spot price of cobalt sulphate edged down. From the supply side, upstream salt plants lowered their quotations, and some traders started selling old inventory, causing some disturbance to market sentiment. Downstream enterprises were cautious, and their willingness to restock decreased, resulting in poor liquidity. Next week, it is expected that downstream enterprises will gradually start restocking out of necessity, and the spot price of cobalt sulphate may turn from weak to strong. This week, the price of cobalt chloride saw a slight decline. From the supply side, market sentiment gradually eased, and the reluctance of cobalt chloride producers to sell began to ease, significantly increasing their willingness to sell, which led to a decrease in quotations. On the demand side, major buyers, Co3O4 manufacturers, delayed purchases out of concern that raw material prices might fall, leading to losses, and their wait-and-see attitude was evident. Next week, as panic subsides and the market becomes more rational, the lack of transactions may prompt some producers to continue lowering prices to improve liquidity, potentially leading to a further decline in cobalt chloride prices. Cobalt Salts (Co3O4): This week, the price of Co3O4 continued to rise. From the supply side, most Co3O4 smelters suspended quotations, hoping for a higher profit window. A few companies, although providing quotations, set them at a high level, forcing some rigid-demand orders to accept these high prices, pushing up the spot market transaction prices. On the demand side, the purchasing willingness of downstream LCO plants was lower than expected, limiting their acceptance of high Co3O4 prices. Meanwhile, the downward trend in cobalt salt prices added to the market's wait-and-see sentiment. In the short term, Co3O4 prices are expected to fluctuate upward, but the tug-of-war between the supply side's firm pricing stance and the demand side's resistance will limit further price increases. If LCO inventory consumption falls short of expectations, Co3O4 prices may experience a temporary pullback. Nickel Sulphate: As of Thursday, the SMM battery-grade nickel sulphate index price was 27,869 yuan/mt, with the quotation range for battery-grade nickel sulphate at 27,800-28,400 yuan/mt, and the average price was higher than last week. On the supply side, although LME nickel prices fell, the extent of cost inversion for nickel salt smelters eased, but their inventory remained at a low level, with limited market circulation of nickel salts, so there was no sign of price concessions. On the demand side, as the cost inversion for precursor plants worsened, the pace of purchases slowed, and transactions this week were relatively quiet. However, some precursor plants still had a need for March stockpiling. Overall, considering the limited market circulation of nickel salts and the existence of some demand, it is expected that nickel sulphate prices will continue to rise next week. Ternary Cathode Precursor: This week, the price increase for 5-series, 6-series, and 8-series ternary cathode precursors slowed. In terms of raw material costs, nickel sulphate prices rose slightly, manganese sulphate prices remained stable, and cobalt sulphate, after three consecutive weeks of significant increases, entered a short-term adjustment phase, with a slight pullback, leading to varying degrees of price adjustments for different series of precursors. On the demand side, influenced by the expectation of rising raw material prices and inventory depletion, material plants gradually made small-scale stockpiling. The overall market remained cautious, with purchases mainly driven by essential needs, and the overall demand in the ternary market was still mediocre. On the supply side, the continuous rise in raw material costs exacerbated the cost inversion for precursor manufacturers, who strongly wished to stand firm on quotes. The discount coefficient for spot orders increased, and some manufacturers may calculate the discount coefficients for nickel sulphate, cobalt sulphate, and manganese sulphate separately. Looking ahead to next week, raw material prices are expected to continue to fluctuate slightly. Under the combined effect of the strong sentiment to stand firm on quotes from precursor manufacturers and the restocking demand from downstream, precursor prices will remain relatively firm, or show a slight fluctuating trend. Ternary Cathode Material: This week, the price of ternary cathode material stabilized, mainly due to the reversal and slight decline in the prices of nickel sulphate, cobalt sulphate, and lithium carbonate. In the spot market, spot order transactions remained low. Although the cost of raw materials on the cost side decreased, the production and price of ternary cathode material did not immediately decline because the procurement order coefficients for some cathode and precursor enterprises had increased, keeping the spot market price relatively stable.

SMM

【SMM Cobalt and Lithium Morning Meeting Summary】LCO Producers' Purchase Willingness Below Expectations With Limited Acceptance of High Co3O4 Prices

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