SunSirs: Cobalt Prices Continued to Slide Throughout August; Is There Any Chance of a Turnaround Ahead?

Cobalt prices continued to fall throughout August

According to the cobalt market analysis system from SunSirs, the price of cobalt stood at 304,700 RMB/tonne on August 21, marking a significant drop of 12.27% from the 347,300 RMB/tonne recorded on August 1. Cobalt prices fell sharply throughout the month; as August remains a traditional off-season for consumption with limited demand support, the market continued to languish while seeking a bottom. Prices remained on a downward trend due to the combined pressure of sell-offs driven by capital factors, increased supplies of recycled cobalt, and sluggish demand.

Demand side: Demand dropped significantly.

Mobile phone shipments declined

Statistics released by the China Academy of Information and Communications Technology (CAICT) show that domestic mobile phone shipments reached 19.149 million units in June 2026, a year-on-year decline of 15.3%. For the first half of 2026, domestic shipments totaled 133 million units, down 5.5% year-on-year.

Driven by rising memory chip prices and the conflict between the U.S. and Iran, the global smartphone market is set to face its most difficult year in 2026. IDC forecasts a 12.9% year-on-year drop in global smartphone shipments for the year. Counterpoint Research projects shipments will fall to approximately 1.08 billion units, marking a new annual low since 2013. FDM predicts a sharp 12% year-on-year decline in global smartphone shipments for 2026. The significant drop in demand within the mobile phone market has led to a decline in demand for cobalt.

The shift from lithium cobalt oxide to ternary materials further reduced demand in the cobalt market.

While there is little difference in specific consumption between lithium cobalt oxide (LCO) and ternary batteries—despite their differing voltage characteristics—the disparity in cobalt content is significant: LCO contains 60% cobalt, whereas "6-series" ternary batteries contain only 6.9%. This means that replacing even a portion of LCO with ternary materials results in a manifold reduction in cobalt demand. In the first half of this year, some mobile phone manufacturers began promoting projects utilizing purely ternary batteries, and a substantial number of mobile phone batteries have adopted a blended approach combining LCO and ternary materials. The shift from LCO to ternary batteries has further reduced demand in the cobalt market.

Growth in new energy vehicle sales has slowed.

Data from the China Association of Automobile Manufacturers (CAAM) shows that in July, my country's production and sales of new energy vehicles (NEVs) reached 1.576 million and 1.561 million units, respectively—year-on-year increases of 26.8% and 23.7%. For the January-July period, production and sales totaled 9.014 million and 9.007 million units, up 9.5% and 9.6% year-on-year. Regarding the domestic market, NEV sales in July stood at 1.008 million units, down 10% month-on-month and 2.8% year-on-year. From January to July, domestic NEV sales totaled 6.098 million units, a year-on-year decline of 11.8%. Overall, while NEV production and sales growth has slowed, domestic sales have dropped significantly; the market is characterized by weak domestic demand and is being driven by exports.

At the beginning of the year, the China Association of Automobile Manufacturers (CAAM) projected a target of 19 million new energy vehicles (NEVs) for 2026; however, this forecast was lowered to the 16-17 million range mid-year, reflecting a significant drop in market growth expectations. A substantial portion of domestic NEV growth is driven by lithium iron phosphate (LFP)—or cobalt-free—models; meanwhile, the share of ternary batteries in domestic installed power battery capacity has fallen sharply, and the shift toward high-nickel chemistries continues to reduce cobalt consumption per vehicle. Consequently, cobalt demand per vehicle is steadily declining, leading to lowered expectations for demand growth in the cobalt market.

Data released by the China Automotive Power Battery Industry Innovation Alliance shows the following regarding installed capacity: In July, the installed capacity of ternary batteries was 11.1 GWh, accounting for 14.9% of the total; this represented a month-on-month decrease of 12.1% and a year-on-year increase of 1.8%. From January to July, the cumulative installed capacity of domestic ternary batteries reached 74.5 GWh, accounting for 18.2% of the total, marking a cumulative year-on-year increase of 12.1%. However, the share of ternary batteries in total installed capacity declined, as did the share for the month of July specifically, and the installed capacity itself fell month-on-month. Consequently, the demand for cobalt for ternary batteries decreased.

Non-battery demand: stable and inelastic, with virtually no cyclical surges.

Demand for high-temperature alloys used in aero-engines, gas turbine blades, and both military and commercial aviation is inelastic and price-insensitive, with steady volume growth. Cemented carbides—used in cutting tools, molds, mining drill bits, and machining tools—rely on cobalt powder; demand here is stable and tracks the overall health of the manufacturing sector. Samarium-cobalt (SmCo) permanent magnet materials—valued for their high-temperature resistance—represent a niche market but constitute a high-value-added, essential requirement. Downstream applications such as chemical catalysts, ceramic glazes and pigments, and medical-grade cobalt-chromium-molybdenum alloys exhibit stable demand but account for a relatively small share of the total market. Overall, non-battery applications represent a minor portion of downstream cobalt demand; as this demand is largely stable and essential, it has a limited impact on cobalt prices.

Supply side: Supply tightened in the first half of the year and eased in the second half.

Although the Democratic Republic of the Congo (DRC) announced its export quota policy in mid-October 2025, delays in the approval process resulted in actual imports of intermediate products into China totaling just over 5,000 metal tonnes for the first half of 2026 (with approximately 2,000 metal tonnes arriving in June). From July onwards, quotas accumulated during the fourth quarter of 2025 and the first half of 2026 will gradually arrive at ports, leading to a slow recovery in intermediate product imports. With increased supply in the second half of the year, the cobalt market is expected to experience a situation of loose supply.

A geopolitical conflict in the Middle East in February 2026 triggered a sulfur supply crisis; meanwhile, the commissioning of new MHP hydrometallurgical projects in Indonesia was delayed and output from existing projects declined, resulting in Chinese MHP imports of only approximately 15,000 metal tonnes in the first half of 2026. Although the crisis in the Strait of Hormuz has not been fully resolved, sulfur shipments have slowly resumed; MHP output from Indonesian hydrometallurgical plants is expected to rebound, leading to a subsequent increase in Chinese imports. With the recovery of Indonesian cobalt supply in the second half of the year, the cobalt market is seeing relatively ample supply.

In 2025, China's supply of recycled cobalt stood at approximately 23,000 tonnes (metal content). In the first half of 2026 alone, the supply reached 21,000 tonnes, with the full-year figure projected to hit 45,000-50,000 tonnes—sufficient to meet 35% of China's cobalt demand. This substantial rise in recycled cobalt supply significantly alleviated the shortage experienced in the first half of the year; with increased supply in the second half, the market achieved a balanced state of supply and demand.

Market Overview and Outlook

Analysts at SunSirs believe that while cobalt prices will fall sharply in 2026 amidst a market characterized by weak supply and demand, the dynamics differ between the first and second halves of the year. In the first half, a supply shortage dominates the market, driven by delays in the arrival of cobalt raw materials from the Democratic Republic of the Congo (DRC) and a decline in supply from Indonesia. Conversely, the second half sees a shift to a loose supply environment as DRC raw materials arrive and Indonesian supply recovers. Under these conditions, prices are expected to continue falling; however, as they drop below 300,000 yuan per tonne—approaching the cost floor—the scope for further decline narrows, suggesting a period of weak consolidation ahead. The price drop may compel cobalt-producing nations to adjust policies or prompt mining companies to alter their shipment schedules, with a potential turnaround in prices likely emerging in the first half of 2027.

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