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SunSirs: In October, International Cobalt Prices were Weak and Domestic Ones Swung down

November 01 2019 13:28:23     SunSirs (Linda)

1. Prices Trend

According to the data monitoring of SunSirs, the cobalt prices have lost rising power suddenly in October. Domestic cobalt prices changed the rising trend in September and fell in shock. On Oct 31, the price of cobalt was 276,833.34RMB/t, 7.82% lower than the price of 300,333.34RMB/t on Oct 1, 3.94% higher than the price of 266,333.34RMB/t on Sep 1. Overall, in October, the cobalt market lost its halo and fell in shock, while the prices of cobalt swung widely to low.  

2. Market Analysis

Cobalt prices (LME spot)

From September to October, the spot cobalt prices of LME rose first, then fell, and then remained stable. The overall international cobalt market is still optimistic, but the strength is not there. The overall trend of cobalt market is weak, and the driving force for the rise of prices is insufficient. At the same time, due to the influence of the cost of cobalt and the relationship between supply and demand, there is limited space for the international cobalt prices to fall, the pressure on the falling prices is relatively small, and the international cobalt prices swing stably. In the future, the domestic cobalt prices are lack of motive force and mainly subject to shock adjustment.

Cobalt prices (LME futures)

From September to October, the futures cobalt prices in LME market went all the way higher, but the prices began to adjust in October. The international cobalt market is still optimistic about the future market expectations, and the cobalt prices remain strong. However, due to the poor performance of demand side such as new energy vehicles at this stage, the upward momentum of cobalt market is weakened. Cobalt prices are not strong enough to rise, and they are expected to adjust in the future.

Sales of new energy vehicles fell 16% year on year in September

According to the data released by China Automobile Industry Association, the sales volume of new energy vehicles in September was 80,000, 34.2% lower year on year, which has been down for three consecutive months. From January to September, the sales volume of new energy vehicles reached 872,000, a year-on-year increase of 20.8%, and the growth rate was significantly lower than that from January to August. The sales volume of new energy vehicles fell for three months in a row, and the decline has an expanding trend. The sales volume of new energy vehicles has not recovered continuously. There is a certain negative voice in the market, and the prospect of new energy vehicles in cobalt market is expected to decrease in the future. The demand for new energy vehicles in the future is expected to decline, which is negative to the cobalt market.

Mobile phone sales fell year on year but recovered month on month

According to the data of China Communications Institute, in September 2019, the total sales of domestic mobile phone was 36.236 million, 7.1% lower year on year, and 17.4% higher, month on month; From January to September 2019, the total sales of domestic mobile phone was 287 million, 5.7% lower year on year. Domestic mobile phone sales fell sharply on a year-on-year basis, but increased on a month on month basis. The demand for cobalt market is expected to decline, but the future market is optimistic. Although the sales volume of 5Gmobile phones in September was only 497,000, the growth rate was optimistic. 5G mobile phone has not yet ushered in rapid development, and it is expected to usher in 5G switching tide in 2020. In 2019, the demand for cobalt in the mobile phone market is not obvious, but the future market is still optimistic.

3. Prospects for the Future Market

According toan analyst of SunSirs, the international cobalt market is no longer hot in October, and the prices fluctuate and adjust, which has a negative impact on the domestic cobalt market, and the domestic cobalt prices have certain downward pressure. The poor performance of new energy vehicles in September is another incentive for the domestic cobalt price to fall in October. The sales volume of new energy vehicles fell for three consecutive months on a year-on-year basis. The demand of cobalt market is expected to decline, and the negative pressure on cobalt prices is further increased. The month-on-month growth of domestic mobile phone market brings a glimmer of light to the demand of cobalt market. Although the growth of mobile phone sales does not mean that the mobile phone market has experienced rapid growth, the demand for spot cobalt has increased significantly. In the future, cobalt market is still optimistic, and there is still room for cobalt prices to rise. However, due to the poor demand performance of cobalt Market recently, the short-term upward momentum is insufficient and there is some downward pressure, and the future market of cobalt prices are still dominated by shock adjustment.

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

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