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SunSirs: Recent Sharp Rise and Fall of Cobalt Prices

December 16 2019 08:42:15     SunSirs (Linda)

1. Trend analysis

According to the data monitoring of SunSirs, cobalt prices have risen and fallen sharply recently, while the overall cobalt prices have fallen slightly. As of December 13, the price of cobalt was 259,666.67RMB/ton, down 0.45% compared with the average price of 260,833.33RMB/ton at the beginning of the month (December 1), and down 25.63% compared with the same period last year.

2. Market analysis

(1) Analysis of cobalt price trend in December

At the beginning of December, cobalt price continued to decline slightly in the previous period, and then it began to recover after the good news of cobalt Market stimulated it; however, the response of cobalt market to the good stimulus was general, the demand of cobalt market did not improve in a short term, and the performance of new energy vehicle market was poor. With the decline of international cobalt price, domestic cobalt price fell sharply; however, the sharp drop of cobalt price exceeded the market expectation, and cobalt price began to rebound as of December On the 13th, the price of cobalt rebounded to 259,666.67RMB/ton. The fluctuating performance of cobalt price reflects the contradictory of cobalt market. It can also be seen that the domestic cobalt price is close to the psychological expectation of cobalt market enterprises.

(2) Good news

Glencore's mutanda copper and cobalt mine entered the maintenance period on November 26, and officially realized the price guarantee for closing the mine. It is expected that the supply of cobalt mine in the future will decrease.

On November 28, 2019, the Ministry of industry and information technology organized a liaison meeting of the inter ministerial joint meeting on energy saving and new energy vehicle industry development to discuss the new energy vehicle industry development plan (2021-2035).

The German government announced to increase the subsidy for new energy vehicles, and it plans to increase the subsidy for electric vehicle purchase by half in the five years starting from 2020. Germany frequently acts on electric vehicle plans. In the next five-year strategic plan of Volkswagen, new energy vehicles will be one of the key investment projects. BMW Group will expand the purchase of power battery in Ningde era.

China's Ministry of industry and information technology released Tesla's mass production license on its website. Tesla officially started mass production of model 3 made in China.

In 2019, the production of lithium batteries rose sharply. Although the output of lithium battery in October fell slightly on a month on month basis, it still rose sharply on a year-on-year basis, with an increase of more than 14%.

(3) Bad news

According to the production and sales data released by China Automobile Industry Association in November, in terms of new energy vehicles, the production and sales of new energy vehicles completed 110,000 and 95,000 respectively in November, down 36.9% and 43.7% year-on-year respectively. From January to November, the production and sales of new energy vehicles completed 1.093 million and 1.043 million respectively, up 3.6% and 1.3% year on year. Under the background that automobile production and sales picked up in November and recovered positive growth year on year, the performance of new energy vehicles obviously failed to satisfy the market.

According to the data of China Academy of communications, in November 2019, the total number of domestic mobile phone market shipments was 34.842 million, down 1.5% year on year; from January to November 2019, the total number of domestic mobile phone market shipments was 358 million, down 5.4% year on year. Mobile phone sales fell, and the demand for cobalt remained weak. Although the supply of cobalt ore is expected to decline, the supply-demand relationship between supply and demand has not been fundamentally changed.

From the LME spot price chart, it can be seen that the international cobalt price has fallen sharply in the near future, which is bad for domestic cobalt price.

3. Future prospects

A data analyst from SunSirs believes that the recent news is all over the world, and the cobalt price, stimulated by various news, fluctuates from high to low, showing the market's ambivalence towards the cobalt market. Glencore's cobalt mine is shut down, and the supply of cobalt mine is expected to decline. According to the development plan of the Ministry of industry and information technology for the next five years, new energy vehicles are still the future development direction of China's automobile industry, and the demand for cobalt will continue to increase in the future. Although major automobile manufacturers have made frequent sales in the new energy vehicle market in the near future, the demand for cobalt at this stage is not obvious. On the contrary, the sales volume of new energy vehicles and mobile phones is not obvious With the continuous decline, the recovery of cobalt demand seems to be out of reach. The domestic market treats cobalt price more rationally. Although there are various good news stimulation in the near future, but the supply-demand relationship has not improved significantly, traders have limited enthusiasm in stock, and cobalt price is difficult to find a high price support point. At the end of the year, speculation capital may enter the market less, on the contrary, cobalt traders due to capital pressure, or low-cost shipments, resulting in a drop in cobalt prices.

Generally speaking, the demand of cobalt market has not changed significantly, and the market investment is more cautious. Although there are various good news stimulation in the near future, the high-speed rise in the early stage of cobalt market is difficult, and the large amount of investment funds in the near future may be almost nil. As the annual close is approaching, the market liquidity pressure increases, and some cobalt enterprises in order to alleviate the capital pressure, or to ship at a low price before the year, lead to the cobalt price in the market Down sharply. In the long run, the cobalt market is bound to pick up, the price of cobalt is bound to rise, and the existence of cobalt warehouse will make a big profit in the future; in the short term, the enterprise will survive and develop in the future, and low-cost shipping of cobalt inventory may be the best choice for the enterprise. The recent rise and fall of cobalt price may be the difficult choice of enterprises under this ambivalence.

Relevant lwasted companies: Huayou Cobalt Industry(603799), Nanjing Hanrui Cobalt Co.,Ltd.(300618) and China Molybdenum Co.,Ltd.(603993).

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