Price Trend

According to the monitoring data of business associations, cobalt prices fell sharply in March, with the lowest price on March 26. After that, cobalt prices recovered, showing a momentum to stop falling and rising. From March 17 to March 23, cobalt prices fell by 7.13%, the biggest one-week decline in recent years. As of March 31, the quotation of cobalt market was 259666.67 yuan/ton, down 12.23% from 295833.34 yuan/ton at the beginning of March, up 2.30% from 253833.33 yuan/ton on March 26, and the declining trend of cobalt price slowed down after the biggest one-week decline in March, and rebounded at the end of the month. The cobalt market has a momentum of stopping the decline and rebounding.

II. Market Analysis

Market Trend Analysis

In January-February 2019, the output of new energy vehicles broke out and increased to 150,000, and the batteries grew to 7.31 million degrees, an increase of 213% over the same period last year. The start of January-February was super strong. From January to February 2019, the production and sales of new energy vehicles and batteries have been booming. The overall market demand for new energy vehicles has risen, which is good for the demand of cobalt market. However, with the further implementation of the new subsidy policy, new energy vehicles will continue to grow, which is good for the market of cobalt.

In terms of consumer batteries, major battery manufacturers have indicated that demand has remained stable in the near future and has not improved significantly. Due to the continuous price reduction of lithium cobalt oxide materials and weak downstream demand, some manufacturers of lithium cobalt oxide materials have insufficient power to start construction recently.

Policies and regulations

In the government work report of 2019 issued by the two sessions, it put forward “promoting the construction of charging and hydrogenation facilities”, which is the first time hydrogen energy has been written into the government work report. Fuel cell vehicle is one of the main forms of hydrogen energy application. The development of fuel cell will offset the development of lithium battery vehicle to a certain extent. The state’s investment in hydrogen fuel cell vehicle will form a competitive relationship with lithium battery vehicle to a certain extent. The growth of lithium battery vehicle will be limited in the future, and the growth of lithium battery will slow down. Demand for cobalt market is negative.

On the afternoon of March 26, the new version of the new energy vehicle promotion subsidy scheme on the official website of the Ministry of Finance of the People’s Republic of China came out in a flash, with a huge decline. Compared with the subsidy method in 2018, the main structure of the new policy has not changed. The subsidy amount is still calculated according to the three dimensions of driving mileage, energy density and vehicle energy consumption, and a transitional period is set up. The transitional period is from March 26, 2019 to June 25, 2019. During the transitional period, the licensed vehicles that meet the requirements of the 2018 technical indicators but do not meet the requirements of the 2019 technical indicators shall be subsidized 0.1 times as much as the corresponding standards in accordance with the Circular of the Development and Reform Commission of the Ministry of Finance, Science and Technology, Industry and Information Technology on the Adjustment and Improvement of the Financial Subsidy Policy for the Promotion and Application of New Energy Vehicles (No. 18, Finance Construction, 2018), and the licensed vehicles that meet the requirements of the 2019 technical Vehicles are subsidized by 0.6 times the corresponding standard in 2018. During the transitional period, the sale of top-brand fuel cell vehicles is subsidized by 0.8 times the corresponding standard in 2018. Subsidies for fuel cell vehicles and new energy buses will be announced separately. The further decline of the subsidy standard in 2019 will inevitably affect the future production and sales of lithium battery electric vehicles. At the same time, due to the state’s investment in hydrogen energy vehicles, market funds will be diverted. The growth of lithium battery electric vehicles in the future will be severely tested, which will have a negative impact on the future market of cobalt.

Enterprise dynamics

Havilah Resources plans to carry out detailed and high-resolution aeroelectromagnetic exploration or AEM in Mutooroo Copper-Cobalt Area, New South Wales, Eastern Australia, in order to explore more cobalt resources. The Mutooroo Copper-Cobalt Deposit contains 8400 tons of cobalt. Cobalt mining enterprises increase their efforts in cobalt exploration. Cobalt mining enterprises are optimistic about the future of the cobalt market, which is beneficial to the cobalt market.

Australian company Magnis Energy Technologies (ASX: MNS) announced that its battery company IM3NY (Imperium 3 New York) has received a $52 million (350 million yuan) fund for lithium-ion battery production in the United States. International giants add lithium batteries, lithium batteries market prospects are good, but lithium batteries business competition intensified, lithium batteries demand for cobalt or short-term turbulence, future market demand for cobalt lithium batteries is generally good.

Volkswagen plans to build a battery recycling plant in Salzgitter, Germany. Since 2020, the plant will receive nearly 1200 tons of spent lithium battery packs annually. Recycling and reuse of waste batteries will reduce the demand for cobalt ore in the market and increase the supply of cobalt metal in the market, which will have a negative impact on the price of cobalt in general.

International Cobalt Price

The MB standard cobalt price on March 29 was $13.75-14.4 per pound, which was higher than that on March 22. The alloy cobalt price was $13.9-14.8 per pound, which was higher than that on March 22. The international cobalt price has stopped falling and rebounded, which is good for the domestic cobalt market, and the domestic cobalt price in the future has sufficient momentum to rise.

3. Prospects for the Future Market

To sum up, Bai Jiaxin, a data analyst with business associations, believes that the cobalt price stopped falling and rebounded at the end of March. The cobalt price has touched a turning point, and the cobalt price will rebound at any time, starting a new round of rise. But now the market investment in cobalt market tends to be more rational, and the future cobalt price is more affected by the relationship between supply and demand. The phenomenon of sharp rise and fall may be difficult to appear.

In the future, the sustained and high-speed growth of new energy vehicles ensures the growth of cobalt demand for new energy vehicles, but the production and sales of smart phone products are declining, the prospects for 5G products are uncertain, the overall demand growth of cobalt market is limited, and the overall cobalt market is bad; in terms of national policy, the further decline of subsidies for new energy vehicles and the increase of support for hydrogen energy vehicles, lithium battery vehicles. Future market growth is bad; in the international market, the rapid growth of global lithium battery vehicles, German lithium battery subsidy plus code, and increased investment of international automobile enterprises in lithium battery vehicles are all good for future cobalt Market demand; at the same time, increased investment in recycling and reuse of waste batteries in the world will also have a certain impact on future cobalt prices, the overall future cobalt market has a mixed profit margin, cobalt market. It is still in the tripartite game among cobalt mining enterprises, government and downstream customers. With the stop and rise of cobalt price, the domestic cobalt price will rise inevitably in the future. However, excessive pursuit of high price and high growth will fall back into the speculative trap of international sellers. It is expected that the adjustment of cobalt price fluctuation or a small increase in the short term will be more likely, and the cobalt price will be difficult to break through 300,000 yuan/ton in the short term.