SunSirs: Sharp Drop after Great Increase, Cobalt Market Needs Calm Analysis

1. Trend analysis

According to the data monitoring of SunSirs, the cobalt price rose sharply this week and then fell sharply. The market of the cobalt market was adjusted by shocks. As of February 23, the price of cobalt was 273,333.34 RMB/ton, down 1.50% from the average price of 277,500.00 RMB/ton on February 18. The price of cobalt on February 18 was 1.34% higher than the price of 273,833.34 RMB/ton at the end of last week. This week, the price of cobalt rose first and then fell, and the market of cobalt fluctuated and adjusted.

2. Reason overview

After two weeks of continuous rise, cobalt prices fell sharply this week. And the performance of cobalt industry in the stock market was poor, and there were several consecutive stops. In the early stage, the performance of cobalt market is so eye-catching, why the performance of cobalt market is so bad this week, and whether the cobalt market can be sustained is the key research topic of cobalt Market in the near future.

The poor performance of the cobalt market this week and the sharp decline in cobalt prices are all based on the news: ‘Tesla is in-depth negotiations with Ningde times to use cobalt free batteries in vehicles made in China.’. As soon as the news came out, the spot price of cobalt fell sharply, and the performance of cobalt enterprises in the stock market was even more green, and many drop stops appeared.

The rise and fall of the spot market is obviously not determined by the supply-demand relationship. After the Spring Festival, spot cobalt prices rose for two consecutive weeks, mainly due to the production reduction and production suspension of cobalt mining enterprises, the establishment of state-owned companies in the DRC to increase the efforts to regulate artisanal mining and other news stimulus, and the future cobalt supply is expected to decline. However, in the spot market, due to the impact of the epidemic, domestic mobile phones, electronic products and other enterprises are limited to start work, the demand of cobalt market has declined significantly, and the logistics is limited, and metal cobalt transactions in the spot market are extremely limited. However, due to the fact that cobalt ore is mostly imported from abroad, and domestic cobalt smelting enterprises start work normally, domestic cobalt supply is sufficient, and domestic cobalt market inventory has increased. The supply and demand of domestic cobalt Market in the spot market is unbalanced, the rise of cobalt price loses support, and the bearish psychology of cobalt market appears. After Tesla announced the use of cobalt free batteries in Chinese factories, the market panic intensified, the bearish voice of the cobalt market soared, and the price of cobalt plummeted.

3. Future prospects

Analysts of SunSirs believe that from the cobalt market after the festival, we can see that the rise and fall of domestic spot cobalt prices are all news stimulus, good news stimulus, and cobalt prices soared. Bad news stimulated cobalt prices to fall. However, in terms of supply and demand, affected by the epidemic situation, the start-up of mobile phone electronic products, new energy vehicles and other enterprises is limited. In the first quarter, the sales and production of mobile phone new energy vehicles will be significantly reduced, and the demand for cobalt will be significantly reduced. In terms of supply, many cobalt mining enterprises and cobalt smelting enterprises will stop production, and the DRC will intensify efforts to regulate the artisanal cobalt mines, so the global cobalt supply will be reduced. Generally speaking, the supply and demand of cobalt market in the future are declining, but in the long run, new energy vehicles are still the development trend, 5G will also bring new growth point of cobalt use, and the long-term rise of cobalt price is still inevitable. However, in the short term, the momentum of cobalt price rise is insufficient, and it is not suitable for cobalt price to catch up with high. It is expected that cobalt price will fluctuate and maintain stability in the short term.

Related listed companies: Huayou cobalt (603799), Hanrui cobalt (300618), Luoyang molybdenum (603993).

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