Cobalt price fluctuations and demand for NMC materials in the lithium battery market drive up prices for lithium batteries
At the beginning of 2017, the domestic metal cobalt price continued the upward trend in the second half of last year. At the same time, the national electric buses lifted the ban on ternary lithium batteries, forming a domestic lithium battery cathode material lithium cobaltate and ternary materials.
On February 7, the prices of domestic metal cobalt and cobalt products rose again across the board. The price of electrolytic cobalt was reported at 325,000 RMB / ton, up 8.9% from the previous day. The price of cobalt has increased from 205,000 RMB/ ton in early January to 20%. The current round of cobalt price increases began at the beginning of November last year and has been rising for more than three months. The prices of major products such as electrolytic cobalt, cobalt tetroxide and cobalt powder have increased by more than 50%.
China’s cobalt raw materials are mainly imported from the Congo. China’s imports of cobalt raw materials mainly come from cobalt concentrates and cobalt intermediate products; while the Congo has been China’s main importer of cobalt raw materials, and China is also one of the main flows of cobalt raw materials in the Congo. In the first 11 months of 2016, Congo accounted for 88% of China’s total cobalt concentrate imports, and accounted for 90% of China’s total imports of cobalt intermediate products. Congo occupies a leading position in China’s cobalt raw material imports. The reason for the sharp decline in imports is mainly due to the decline in Congo’s imports.
Earlier, the turmoil in the Congo has affected the production of cobalt in the Congo. Since August this year, Kabila, who has been reluctant to abdicate, has been in conflict with the opposition. Dozens have been killed in the September parade. Kabila’s term should have expired on December 19th. In the earlier communication, the opposition did not reach a generally accepted agreement with the government. Since December 19, the Congolese situation has deteriorated again. As of December 24, the unrest in Congo has killed 56-125 people. At the beginning of the new year 2017, another 26 people were killed in the conflict. According to the latest news, Kabila has reached an agreement with the opposition to hold a presidential election at the end of 2017. However, due to political instability and child labor issues in artisanal mining, Congo’s cobalt output has declined. Data show that the output of Congo (gold) cobalt ore shrank by 19% in the first quarter, and the output of Congo cobalt ore in the third quarter still fell by 9%.
China’s imports of cobalt raw materials from the Congo have fallen significantly. In the first 11 months, China imported a total of 121,200 tons of cobalt concentrate from the Congo, a year-on-year decrease of 407,900 tons, a drop of 41.27%; the volume of imported intermediate products also fell to 136,400 tons, a 5% decrease from the same period last year.
On December 30, 2016, the Ministry of Mines and the Ministry of Finance have issued a decree deciding to extend the export of concentrates again. The specific period has not been determined. However, in the first week of 2017, due to the delay in the delivery of government orders, some provincial mining bureaus (such as Katanga Province) stopped processing concentrate export procedures.
It is understood that the current ban on cobalt concentrates is gradually flattening, and export procedures are returning to normal. However, potential policy disturbances may still exist. This is also something local companies have been talking about a lot, such as raising concentrate export taxes or implementing export quota systems risk.
At the same time, the market needs to pay close attention to the continuous financialization of the international cobalt market and the appearance of investment funds. According to data from research institutions, recently, overseas investment institutions have been paying increasing attention to the cobalt market. Funds have begun to buy from traders. Cobalt metal. For the cobalt market with its small capacity, the involvement of investment funds is becoming an important factor driving the upward movement of overseas cobalt prices.
In China, we have also observed that the position of Wuxi Pan Cobalt products has continued to expand, and its position has increased from 180 tons in early July 2016 to more than 2200 tons at present.
Of course, we also see that the tight supply of cobalt raw materials in 2017 has gradually become an industry consensus. In order to cope with the risk of rising cobalt prices, downstream cobalt application companies including lithium battery industry chain companies and high-temperature alloy companies are hoping to increase inventory and lock up. Raw materials and other aspects to avoid the risk of cobalt prices, which in turn further strengthened the short-term demand and price increases. At the same time, under the judgment of the trend of rising cobalt prices, upstream smelting companies have adjusted their shipment rhythms and strategies.
In short, we believe that in addition to the improvement in physical supply and demand, the financial factors of the cobalt market are getting stronger and stronger, which will be a new problem that the cobalt industry will have to face. It is also a factor that cannot be ignored in the driving force of cobalt price.