- Falling yuan supports prices
- Outlook bearish for demand in October
The prices of Chinese cobalt sulfate stayed rangebound Sept. 26 as a weakening yuan supported prices despite low domestic demand.
Platts assessed battery-grade 20.5% Co cobalt sulfate at Yuan 60,700 ($8,635)/mt DDP China Sept. 26, flat on the day and down Yuan 200/mt on the week.
Tradable levels were mostly pegged by market sources at around Yuan 60,000-61,000/mt Sept. 26, largely unchanged from levels in the previous week with the highest offer heard at Yuan 61,000/mt.
According to sources, the sentiment in the market was largely bearish as a projected increased in downstream demand in late Q3 failed to materialize.
“The market was expecting prices to reach Yuan 65,000/mt in Q3, however, it didn’t materialize given that most traders are erring on the side of caution and avoiding building inventories. Therefore, not expecting much demand till after China’s Golden Week,” a South Korean trader said.
The Golden Week holiday in China is expected to last over Oct. 1-7.
“Cobalt sulfate demand is not picking up, with the outlook looking rather bearish for cargoes loading in October, when there are limited volumes changing hands,” a China-based consumer said.
Market participants added that while demand for cobalt sulfate remains weak, macro factors might put some upward pressure on domestic prices.
“Depreciation is adding a lot of pressure in terms of capital cost for producers, with increased overseas prices due to exchange rate differences. We will see an inevitable increase in domestic prices,” the China-based consumer added.
Other market sources also said that a weakening Yuan should increase export opportunities and will support domestic prices.
“Prices will likely increase on higher offers due to increasing costs and a weakening Yuan, albeit at a slower rate as demand remains low,” a Chinese trader said.
Platts assessed battery-grade 20.5% Co cobalt sulfate at $9,200/mt CIF North Asia Sept. 26, stable on the day and on the week.
Market sources expect more clarity to emerge post the Golden Week holiday in China, with regional producers unwilling to commit to inventories in the lead up amid muted demand in China.
Platts is part of S&P Global Commodity Insights.