Further release of auto consumption potential favors upstream cobalt price rebound
2023/6/29
As for the prices of derivatives, Mysteel data showed that battery-grade cobalt sulfate (crystal) and tricobalt tetraoxide were quoted at 40,500 yuan/ton and 165,500 yuan/ton respectively on June 27, with a cumulative increase of 8% and 10.33% respectively since June 1.
The reporter called Shengtun Mining Group Co., Ltd. as an investor, and the person in charge of the company said that the production and operation of the company's cobalt products are relatively normal at present, and in the first half of the year, the overall output was reduced compared with the same period last year, mainly because the price of cobalt products was at a low position in the first quarter and fluctuated at a low level in the second quarter, and the company subjectively adjusted the production of cobalt and copper products. The company subjectively adjusted the production ratio of cobalt and copper products, and will also make adjustments in the future in response to the market price situation.
According to the person in charge of Pengxin Resources, although the production and operation of the company's cobalt products are relatively normal at present, the company has not purchased ore from outside because the price is still at a low level.
Ye Yindan, a researcher of the Bank of China Research Institute, said in an interview with reporters that cobalt prices have continued to rise since June, mainly due to the phenomenon of supply exceeding demand in the market. From the supply side, the price of cobalt products kept sinking to the cost line in the early stage, and some smelters entered the loss-making stage one after another. The recent rebounding market that could be expected boosted the confidence of traders holding the spot to raise their quotations, while the enthusiasm of downstream purchases increased significantly, driving the transaction atmosphere of the spot market of cobalt products.
"On the demand side, the production and sales of new energy vehicles have maintained a rebounding trend since this year, driving the growth of the installed power battery volume, and the overall demand for cobalt products has been released. In addition, with the promotional peak season entering in June, the demand for 3C electronic products was raised as expected, and the purchasing sentiment in the field of high-temperature alloy turned from cautious to positive, and with the support of declining inventory and strong cost, the price of cobalt products formed a stopping and rebounding trend." Ye Yindan also said that from the subjective level, the market's pessimism about the future market has receded, and the general belief that the bottom has appeared is also one of the reasons for the recent cobalt price recovery.
Qin Liang, chief industry researcher of East High Tech, added to the reporter, "Under the influence of low prices, most smelters have adjusted their production strategies, while the market's immediate replenishment sentiment has recently heated up, leading to a shortage of cobalt product inventories in the near future, making practitioners in the circuit hold a bullish mentality more often and driving the price recovery."
What will be the trend of cobalt product prices in the second half of the year? Ye Yindan said it is expected that as the economy continues to repair and the macro policy further takes effect, end consumption such as new energy vehicles and electronic products is expected to continue the recovery trend, and the recovery of domestic demand will support the prices of cobalt products. "For example, the State Council executive meeting on June 2 proposed to continue and optimize the vehicle purchase tax exemption policy for new energy vehicles, and the notice on organizing activities to promote consumption of automobiles issued by the Ministry of Commerce on June 8, etc. The policies to promote the consumption of new energy vehicles will gradually be implemented on the ground, overlaid with the fact that many car enterprises are launching new models one after another, which are conducive to the potential of automobile consumption These are conducive to the further release of automotive consumption potential, which is favorable to the further recovery of upstream cobalt product prices."
It is worth paying attention to the fact that, influenced by the continuous low price previously, the profit situation of many listed companies in the cobalt sector in the A-share market in the first quarter was not satisfactory.
In this regard, Ye Yindan said frankly that the stabilization of cobalt prices and the improvement of market sentiment will, to a certain extent, promote the performance repair of cobalt-related enterprises in the first half of the year, but the specific degree and speed will also depend on the sustainability of the recovery of terminal demand, the recovery of overall consumer confidence, and the upstream cost changes.
Qin Liang said that the price adjustment logic of domestic cobalt salt smelters is shifting to demand-led. Cobalt-related companies are also gradually extending to the downstream manufacturing industry, striving to form an integrated cost advantage of "cobalt-nickel-precursor-triad". Against the background that there is still more room for upward demand in the future, investment targets that can open up the upstream and downstream of the cobalt industry chain will be more worthy of attention.
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