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SunSirs: Will Chinese Cobalt Market Stop Falling?

May 06 2021 08:33:25     SunSirs (Linda)

In April, the cobalt market continued to be overcast. International cobalt prices have fallen all the way, the upstream cobalt salt prices have plummeted, and the downstream mobile phone market is expected to decline in sales due to the impact of the Indian epidemic. Although new energy vehicles have been singing all the way, they have also encountered Tesla's brakes. The industrial chain market has continued to be haze and the cobalt market in the future Can the market stop falling and rebound?

Trend analysis

In April, the domestic cobalt market continued to fall. At the end of April, downstream customers stocked up on May Day. Demand in the cobalt market rose briefly, and the cobalt price rose slightly after changing its downward trend. As of April 30, the cobalt price was 345000.00 yuan/ton, which was a drop of 2.17% from the beginning of the month (April 1) cobalt price of 352,666.66 yuan/ton; it was up from the lowest point (April 25) of 337000.00 yuan/ton. , An increase of 2.37%. However, the continuity of the rise in cobalt prices remains to be examined.

International cobalt price trend

The international cobalt market weakened in April, and the LME cobalt price fluctuated and fell. It fell all the way until it bottomed out on April 26 and rebounded, and then rose slightly on April 29. The international cobalt market has stopped falling and the rise is small, which is of limited benefit to the domestic cobalt market.

According to MB cobalt price statistics, MB cobalt prices fluctuated and fell in April, and cobalt prices stopped falling and stabilized at the end of April. The decline in the international cobalt market slowed down, which weakened the negative for the domestic cobalt market and weakened the downward pressure on the domestic cobalt market.

India Covid-19 outbreak

Since April, India's daily increase in the number of confirmed cases of new crowns has hit a record high. According to official Indian data, the number of confirmed cases in India exceeded 100,000 for the first time on April 5, 200,000 on the 15th, and 300,000 on the 22nd. India is the world's second largest mobile phone manufacturer. The new crown epidemic in India continues to worsen, affecting mobile phone manufacturing. 3C electronic products such as mobile phones are important downstream products of electrolytic cobalt. The reduction in output has reduced the demand for cobalt in the cobalt market.

Cobalt salt prices stabilize

Due to the obvious decline in domestic demand for 3C products, the demand for cobalt salt has fallen; the price of cobalt salt in the market plummeted in April, dragging down the cobalt market. The price of cobalt salt stabilized at the end of the month, and the market for cobalt salt stabilized, which weakened the negative for the cobalt market.

Tesla accidents happen frequently

Judging from the news that has been publicly exposed by the media, since 2020, there have been more than ten incidents of Tesla brake failure. In more than a year, such incidents occurred frequently in Jiangxi, Shanghai, Zhejiang, Sichuan, Beijing, Jiangsu, Shenzhen and other places across the country. However, most of Tesla officials did not give a detailed and accurate response to the cause of such accidents. The relatively high density of brake failure accidents in a short period of time "getting together" will inevitably trigger market concerns about Tesla's quality and affect the sales of Tesla and even electric vehicles.

New energy vehicle market

According to data released by the China Automobile Association, in March, my country's new energy vehicle production and sales were completed by 216,000 and 226,000, respectively, an increase of 2.5 times and 2.4 times year-on-year. From January to March, my country's new energy vehicle production and sales were completed by 533,000. And 515,000 vehicles, an increase of 3.2 times and 2.8 times respectively. Although there are concerns about the quality of Tesla and other brands of electric vehicles, the production and sales of new energy vehicles increased sharply in the first quarter. The market is still full of confidence in new energy vehicles, which is positive for the cobalt market outlook.

Quotes Summary

The domestic cobalt market in April was consistent with the international cobalt market, and both stopped falling and stabilized at the end of April, but the market outlook still depends on the industry chain market. Affected by the epidemic in India, my country's electronic product exports have declined, and global production of 3C products such as mobile phones has declined. The price of cobalt salt continued to fall in April, dragging the cobalt market to rebound. With the promotion of vaccines, the market’s concerns about the decline in demand in the cobalt market have eased, but the Indian epidemic continues to worsen, and as the second largest mobile phone manufacturer after China, India's epidemic is bound to cause a decline in mobile phone production. The market demand has fallen. New energy vehicles maintain a consistent upward trend, but Tesla’s quality controversy has brought a haze to the market outlook for new energy vehicles, and the sales of new energy vehicles may be difficult to meet expectations.

On the whole, the cobalt salt market is declining, mobile phone production is expected to decline, new energy vehicle growth is expected to decline, global cobalt market demand is expected to decline, the oversupply of the cobalt market is increasing, and cobalt prices are under pressure to fall. Although the cobalt price rose briefly at the end of April, the cobalt market industry chain continued to be haze, and the cobalt market outlook was unsustainable. The cobalt price is expected to fluctuate and fall in May. However, due to the high cost of cobalt ore, the room for cobalt prices to fall is limited. In the future, the cobalt price will fluctuate between 320,000 yuan/ton and 350,000 yuan/ton.

Related listed companies: Huayou Cobalt (603799), Hanrui Cobalt (300618), Luoyang Molybdenum (603993).

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