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China’s imports of cobalt intermediates and exports of cobalt metal jumped in July from a year earlier, according to data released by the country’s General Administration of Customs (GACC) on Tuesday August 20, and participants say the increased volumes continue to send signals of oversupply to a sluggish cobalt market.
Chinese imports of cobalt intermediates totaled 50,398 tonnes in July, up by 51% month on month and 140% year on year, according to GACC.
Participants said the delivery of material from newly signed quarterly and half-year contracts had caused July imports to increase month on month.
Delays in seaborne logistics also contributed to the increase, causing shipments from the previous month to arrive in July, according to a trader.
“Some shipping companies are short of containers, causing many shipments from different batches to arrive late at port in July,” the trader said.
A significant expansion of mining capacity in the Democratic Republic of Congo (DRC) continued to contribute to the year-on-year rise, sources told Fastmarkets.
Cobalt, a byproduct of copper and nickel mining, has seen a ramp-up in capacity due to increases in the prices of these two metals, Fastmarkets understands.
CMOC, one of the largest mining companies in the DRC, reported mined production of 54,024 tonnes of cobalt metal in the first six months of 2024, a 178% year-on-year increase.
Continued high imports numbers have painted a pessimistic outlook among market participants for the rest of 2024.
“Cobalt consumption is slow at the moment, whether for metals, sulfate or tetroxide. Even if consumption increases next quarter, there is no way the increase could balance such a large amount of supply coming in,” a Chinese cobalt intermediates consumer said.
“Import numbers continued to reach high levels. The mining oversupply is passing on to the cobalt supply chain. I don’t see such sluggishness to end any time soon,” a second cobalt trader said.
The global cobalt market is expected to be oversupplied by 23,000 tonnes in 2024, according to Fastmarkets research.
Chinese exports of cobalt metal totaled 654 tonnes in July, a decline of 34% month on month but an increase of 160% year on year, according to GACC figures.
Participants attributed the monthly decrease primarily to the unfavorable price margin between Chinese domestic cobalt and international standard-grade prices, which muted export activity.
Even a traditionally quiet month like July had shown over 600 tonnes of cobalt metal exports. It reflects significant oversupply and I see the number only increasing for the rest of the year.
Fastmarkets’ assessment of cobalt 99.8% Co min, ex-works China, averaged 182,778-230,778 yuan per tonne in July, which equates to $11.48-14.49 per lb. This is $0.26-1.60 per lb higher than international standard grade prices, which averaged $11.22-12.89 per lb over the same period.
Nevertheless, sizable export volumes are being maintained through tolling agreements between Chinese smelters and European producers, which contributed to the year-on-year increase in China’s cobalt metal exports during July, according to market sources.
The Netherlands, the primary destination of Chinese cobalt metal export, received 507 tonnes of cobalt metal in July, accounting for 78% of China’s July total export of cobalt metals, according to GACC.
Such large export numbers had worsened the oversupply in the standard grade market, causing prices to decline to an eight-year low.
Fastmarkets’ daily price assessment for cobalt standard grade, in-whs Rotterdam, fell to $10.50-12.00 per lb on August 19, widening downward by $0.25 per lb from the previous assessment, and declining to the lowest level since June 2016.
Chinese cobalt prices also hit an eight-year low, with smelters ramping up capacity to cope with additional intermediates supply.
Fastmarkets’ twice-weekly price assessment for cobalt 99.8% Co min, ex-works China, at 171,000-205,000 yuan ($23,955-28,718) per tonne on August 16, unchanged from the previous session, but down by 19,000-35,000 yuan per tonne from 190,000-240,000 yuan per tonne on July 3.
Most participants see prices staying at low levels until the end of the year.
“Even a traditionally quiet month like July had shown over 600 tonnes of cobalt metal exports. It reflects significant oversupply and I see the number only increasing for the rest of the year,” a third cobalt trader said.
“Although the demand might pick up for the fourth quarter, it would not send much support as the oversupply fundamentals are hard to improve,” a fourth trader said.
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