Market participants are divided on their outlook for the Chinese cobalt market, with some expecting prices to move up in view of rising feedstock costs and others anticipating a near-term downtrend as the downstream industry is not buoyant enough to sustain the price rally.
Chinese cobalt metal prices were last assessed at 415-435 yuan/kg ($65-68/t) ex-works on 16 November, up by 16.9pc from the end of August when prices began to rally. European prices for chemical grade metal rose to $28.90-29.40/lb du Rotterdam on 16 November, up by 20.7pc since prices bottomed out in early August. The current level is much higher than that of China.
Argus last assessed prices for 24pc grade chloride and 20pc grade sulphate at Yn10.30-10.60/kg ex-works and Yn90-93/kg ex-works yesterday, also lower than prices in Europe. Since crude hydroxide feedstock prices are typically settled based on European cobalt metal prices, cobalt refiners in China will obtain lower profit margins or even zero profit, according to market participants.
Many Chinese producers have cut their cobalt metal output this year and switched to producing salts, China produced 5,600t of cobalt metal in January-September, down by 34pc from a year earlier, according to Argus data, which will also drag down global output. Argus estimates global cobalt metal output will decrease by 25pc on the year to 24,000-25,000t in 2021.
China imported 5,801t of cobalt metal during January-September, up by 51pc on the year, while exports...
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