In 11 trading days, electrolytic cobalt has risen by 54.4%! The cumulative increase exceeds 80,000 yuan/ton

In 11 trading days, the price of electrolytic cobalt has risen by 54.4%, with a cumulative increase of over 80,000 yuan/ton!

Not only have the prices of electrolytic cobalt and other cobalt products increased, but the stock prices of listed companies in this sector have also been in the green for many days. Compared to the closing prices on February 24, the closing prices of Tengyuan Cobalt Industry, Huayou Cobalt, Hanrui Cobalt, and CMOC on March 11 increased by 35.5%, 25.7%, 20.9%, and 11.3%, respectively. Why has cobalt, which previously saw its price halved due to a surge in supply, regained the attention of the capital market with a rising trend?

On February 24, the government of the Democratic Republic of the Congo announced a four-month suspension of cobalt exports, citing concerns over global market oversupply and the need to adjust supply. Subsequently, cobalt prices "responded" with an increase. According to data from Shanghai Steel Union, the domestic market price for electrolytic cobalt on March 11 was 238,000 yuan/ton, an increase of 83,800 yuan/ton compared to the price on February 24.

It is understood that among the 19 cobalt mines in the Democratic Republic of the Congo, 15 are operated by Chinese enterprises or have Chinese investment backgrounds.

An industry insider told the Shanghai Securities Journal that their company has cobalt mining operations in the Democratic Republic of the Congo. If the export suspension lasts only four months, the company's production operations, supply chain, and existing orders will be minimally affected. However, the Congolese side has shown a clear intention to support prices, and further measures such as continued price support or export restrictions cannot be ruled out.

CMOC stated to the Shanghai Securities Journal that the company is currently unable to export cobalt products from its mining areas in the Democratic Republic of the Congo. Previously, the reporter learned from CMOC that the company has established a special task force to maintain active communication with the Congolese government and industry regulatory agencies, closely tracking the progress of policy implementation. Production and operational activities at the TFM and KFM mining areas are proceeding in an orderly manner, and it is expected that this temporary measure will not have a significant impact on operational performance.

For the cobalt industry chain, downstream enterprises are mainly adopting a cautious wait-and-see attitude, and there may still be room for cobalt prices to rise.

According to a research report from Minsheng Securities, cobalt production in the Democratic Republic of the Congo accounts for about 76% of the global total, while Indonesia accounts for about 10%. The four-month suspension of cobalt raw material exports from the Democratic Republic of the Congo may lead to a reduction of about 25% in global cobalt supply, potentially shifting the cobalt supply-demand balance from surplus to deficit. Meanwhile, due to the previous downward trend in cobalt prices, there is not a strong willingness within the industry to retain inventory, and it is expected that domestic cobalt raw material inventory can be maintained for about three months, making it difficult to change the tight supply situation.

In the view of the aforementioned industry insiders, there is still room for cobalt prices to rise. Bai Qiong, a cobalt analyst at the New Energy Division of Shanghai Steel Union, stated that the market is concerned that the supply of cobalt intermediates from the Democratic Republic of the Congo will be disrupted for a long time, leading manufacturers to hold back on sales, resulting in tight market circulation and rapid price increases for cobalt products.

For the rapidly rising cobalt products, downstream enterprises are mainly adopting a cautious wait-and-see attitude. Bai Qiong indicated that the downstream is facing a situation of being forced to accept price increases. Currently, there are small transactions occurring in the downstream electrolytic cobalt market, while transaction volumes for cobalt salts among ternary enterprises are extremely low. The rapid price increase and the uncertainty of policies have a significant impact on price trends, leading downstream enterprises to generally maintain a wait-and-see attitude Will the rise in cobalt prices lead to a faster "decobaltization" of batteries? Industry insiders stated that this event will not adversely affect the application of cobalt in ternary lithium batteries. When the cobalt-nickel price ratio is below 1.5, the motivation for decobaltization in the battery industry is weak. Although the current cobalt-nickel price ratio has exceeded 1.5, cobalt accounts for about 10% to 20% of the nickel-cobalt-manganese required in batteries, and this proportion is difficult to significantly reduce further.

"However, the instability of policies in major cobalt-producing countries will pose systemic risks to the resilience of their supply chains. This consideration may lead some companies to advance the 'decobaltization' process," said Bai Qiong.

Minsheng Securities analysis stated that the cobalt export ban in the Democratic Republic of the Congo will not last long, and a quota system may be the best solution. Chinese companies may obtain quotas based on production, thereby exchanging quantity for price, and the profit center of the cobalt sector is also expected to rise.

Shanghai Securities News, original title: "In 11 trading days, it rose by 54.4%"

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