Refined Cobalt Prices Fall Whilst Cobalt Salt Markets Show Resilience

How Did Refined Cobalt Prices Perform This Week?

The refined cobalt market experienced a significant downturn this week, with prices dropping by 2,500 yuan/mt over five consecutive trading days from July 7-11, 2025. According to the latest Shanghai Metal Market (SMM) data, current spot prices have settled at 240,000-256,500 yuan/mt, with an average price of 248,250 yuan/mt, representing approximately a 1% decrease from the previous week.

This decline marks a noticeable shift in the market's trajectory, particularly when compared to the strong performance seen throughout most of the first half of 2025. The ongoing weakness in refined cobalt prices could impact the broader battery metals investment landscape as investors reassess their positions.

Supply-Demand Dynamics Driving Price Movement

Several interrelated factors have contributed to this week's price decline:

• Stable long-term contracts vs. limited spot offerings: Refined cobalt smelters have maintained consistent supplies to long-term contract customers while simultaneously reducing their spot market offerings.

• Production cost pressures: Despite the downward price trend, ex-factory prices remained relatively unchanged due to persistent production cost considerations that are limiting producers' ability to lower prices further.

• Bearish futures sentiment: The futures market has turned increasingly pessimistic following negative industry news, particularly concerning potential oversupply in certain downstream segments.

• Inventory buildup: High social inventory levels continue to exert downward pressure on the market, with warehouse stocks increasing by approximately 8% since early June.

• Seasonal demand weakness: The traditional summer lull during high-temperature periods has limited purchasing activity across multiple downstream sectors.

"The refined cobalt market is experiencing a typical mid-summer correction, exacerbated by inventory concerns and cautious downstream procurement," notes SMM's latest weekly report (July 11, 2025).

Industry participants have responded to these conditions by adjusting their purchasing strategies. Most downstream producers have adopted just-in-time procurement approaches, purchasing only what they need for immediate production rather than building stockpiles. This behavior further dampens spot market activity and reinforces the current bearish sentiment.

How Are Cobalt Salt Markets Performing?

In stark contrast to refined cobalt's decline, the cobalt salt markets have shown remarkable resilience, with key products demonstrating price strength despite the weakness in the refined segment.

Cobalt Sulphate Shows Strength Despite Refined Cobalt Weakness

Cobalt sulphate prices continued their upward trajectory this week, reaching 49,400-52,050 yuan/mt as of July 11, according to SMM data. This represents an average price of 50,725 yuan/mt, marking a 1,075 yuan/mt (2.17%) increase from the previous week. Transaction prices generally ranged between 49,000-52,000 yuan/mt, with many deals reported around the 50,000 yuan/mt level.

This price divergence between refined cobalt and cobalt sulphate is particularly noteworthy, as it challenges the traditional price correlation between these products. Historically, cobalt sulphate prices have closely tracked refined cobalt movements with a slight lag, but the current market is demonstrating a decoupling of these price relationships. Similar trends are being observed in other regions, with the Cobalt Blue expansion project in Australia taking a keen interest in these evolving market dynamics.

Market Factors Supporting Cobalt Sulphate Prices

Several key factors have contributed to cobalt sulphate's price resilience:

• Bullish producer sentiment: Despite softening in the refined cobalt market, cobalt sulphate producers have maintained a positive market outlook, supported by relatively tight supply conditions.

• Strategic pricing by smelters: Smelters have gradually increased quotes for new production batches, pushing up the price floor for the entire market.

• Inventory management by traders: Traders holding existing inventory have raised asking prices, contributing to the overall market strength.

• Improved inquiry activity: Market inquiry sentiment has improved compared to previous weeks, indicating potential for stronger future demand.

• Moderate transaction volume growth: Actual transaction volumes have increased modestly, providing tangible evidence of demand recovery.

• Raw material cost pressures: Persistent cost pressures from raw materials continue to support price levels, with manufacturers unable to reduce prices without compromising margins.

Downstream Demand Showing Market Segmentation

The cobalt sulphate market is experiencing varied demand patterns across different sectors, creating a fragmented demand landscape:

• NCM battery material producers are showing limited improvement in orders, with many maintaining a wait-and-see approach due to uncertainty about end-market demand.

• Traditional chemical enterprises are finding current price levels relatively favorable for their production economics, with some actively making market purchases around the 50,000 yuan/mt level.

• Refined cobalt processing operations have largely suspended procurement activities due to poor economic viability under current price relationships.

This segmentation in downstream demand highlights the complex dynamics currently at play in the cobalt market, where traditional price relationships and demand patterns are being disrupted by changing industry structures and market conditions.

What's Happening in Other Cobalt Product Markets?

The broader cobalt product ecosystem shows varying performance across different segments, with certain specialty products demonstrating particular strength despite the challenges facing refined cobalt. The critical minerals outlook for 2025 indicates these trends may persist as global supply chains continue evolving.

Cobalt Chloride Maintains Upward Momentum

Cobalt chloride prices continued their ascent this week, reaching 61,650-63,000 yuan/mt as of July 11, according to SMM data. With an average price of 62,336 yuan/mt, this represents a 700 yuan/mt (1.14%) increase from July 4. Current transaction prices are hovering around 62,000 yuan/mt, with limited deals being concluded at the higher 63,000 yuan/mt level.

The strength in cobalt chloride markets stems from its specialized applications and relatively concentrated production base. Unlike more commoditized cobalt products, cobalt chloride benefits from:

• Limited production capacity changes in recent months
• Specialized applications in catalyst production and electroplating
• Higher technical barriers to entry for new producers
• Relatively stable demand from industrial applications less affected by seasonal factors

These characteristics have enabled cobalt chloride to maintain price stability and even growth during periods when other cobalt products face downward pressure.

Co₃O₄ Market Faces Supply Constraints

Co₃O₄ (cobalt oxide) prices rose consecutively this week, reaching 202,000-212,000 yuan/mt as of July 11, with an average price of 207,000 yuan/mt according to SMM data. This marks a 3,000 yuan/mt (1.47%) increase from July 4.

The Co₃O₄ market is experiencing several notable developments:

• Supply limitation strategies: Some producers have suspended quotations entirely, creating artificial scarcity in the spot market.

• Wait-and-see approach: Both upstream and downstream participants have adopted cautious positions, limiting market activity while monitoring price trends.

• Contract-dominated transactions: Most transactions now involve long-term contract deliveries rather than spot market purchases.

• Strategic production management: Co₃O₄ plants are limiting shipments while monitoring market sentiment, carefully managing inventory to avoid oversupply.

• Low downstream inventories: LCO cathode plants are maintaining relatively low inventory levels, creating potential for future restocking demand.

• Price expectations divergence: Producers have indicated expected transaction prices of 210,000-230,000 yuan/mt, though high-price deals remain scarce in the current market.

This complex interplay of supply management and cautious demand has created a relatively balanced market for Co₃O₄, allowing it to maintain price strength despite challenges in related cobalt segments.

What Corporate Developments Are Impacting the Cobalt Sector?

Recent corporate announcements and strategic initiatives are providing significant insight into how major industry players are navigating the current market landscape and positioning themselves for future developments. Furthermore, recent advances in battery recycling breakthrough technologies may influence long-term market dynamics.

Huayou Cobalt Reports Strong H1 2025 Performance

Huayou Cobalt, one of China's leading cobalt producers, has released its H1 2025 earnings forecast, projecting net profit attributable to shareholders of 2.6-2.8 billion yuan. This represents a significant 55.62%-67.59% year-over-year increase, substantially outperforming analyst expectations.

The company attributes this impressive growth to several strategic advantages:

• Vertical integration benefits: Sustained operating advantages from their vertically integrated business model spanning mining to refining to battery materials.

• Commodity price tailwinds: The cobalt price rebound during H1 2025 has significantly benefited product profitability across their portfolio.

• Operational excellence initiatives: Successful management reforms and cost-cutting measures have improved operational efficiency.

• Indonesia project milestones: Full production achievement at the Indonesia Huafei project has provided access to lower-cost nickel and cobalt resources.

• Project optimization: The Huayue project has maintained stable high output while implementing further cost reduction measures.

• Raw material self-sufficiency: Improved self-sufficiency in MHP (mixed hydroxide precipitate) raw materials has reduced exposure to market fluctuations.

• Downstream recovery: The company's cathode material business has resumed growth after a challenging period.

• Innovation leadership: Enhanced technological innovation capabilities have improved product quality and production efficiency.

This strong performance from one of the industry's largest players indicates that despite market challenges, well-positioned companies with integrated operations can achieve significant growth in the current environment.

Tengyuan Cobalt's Production Status and Expansion

Despite regulatory challenges in the Democratic Republic of Congo (DRC) including the ban on cobalt exports from salt plants, Tengyuan Cobalt confirmed on July 7 that its production line in the DRC remains in normal operation. This announcement has provided some reassurance to the market regarding supply continuity from a major production region.

Simultaneously, the company reported progress on its domestic expansion efforts, noting that its new 5,000 mt production line for cobalt tetroxide at Ganzhou Tengchi has entered the trial production stage.

This expansion project, announced in December 2024 with an investment of 98.9019 million yuan, aims to deliver several strategic benefits:

• Cost optimization: The project will reduce production costs through technological innovation and economies of scale.

• Quality improvement: New production techniques are expected to improve product quality and consistency.

• Operational efficiency: The expansion is designed to enhance overall production efficiency and resource utilization.

• Product diversification: The new capacity will allow optimization of the company's product structure to better match market demand.

• Profitability enhancement: These improvements are expected to enhance the company's sustained profitability.

• Strategic positioning: The expansion supports the company's high-quality development strategy and market position.

These corporate developments highlight how leading industry players are continuing to invest in capacity expansion and operational improvements despite short-term market volatility, indicating confidence in the medium to long-term outlook for cobalt demand.

What Is the Outlook for Cobalt Prices?

The cobalt market is at a critical juncture, with current price dynamics suggesting potential for significant movement in the coming months. Industry analysts and market participants are closely monitoring several key indicators to forecast future price trends. Many of these trends align with the broader critical minerals strategy being deployed by major economies.

Short-Term Price Projections

Based on current market conditions, analysts project varying outcomes for different cobalt products:

• Refined cobalt prices will likely maintain a fluctuating trend in the short term, with downside limited by production costs but upside constrained by inventory overhang.

• Cobalt sulphate prices are expected to remain strong next week due to persistent raw material cost pressure and relatively balanced supply-demand fundamentals.

• Cobalt chloride prices are anticipated to stabilize within the 61,000-63,000 yuan/mt range as market participants digest recent price increases.

• Long-term pricing will depend heavily on cobalt inventory levels, particularly whether current stocks can sustain through December when seasonal demand typically strengthens.

According to Dongwu Securities' latest analysis cited by SMM, "The market anticipates inventory to be largely digested by August-September, potentially creating conditions for a second price rally if fundamentals continue to improve."

Factors to Monitor

Several key indicators will influence future price movements and should be closely tracked by market participants:

• Supply chain cost structures: Cost increases across the supply chain will provide a floor for prices, with current production costs for refined cobalt estimated at 230,000-240,000 yuan/mt.

• Inventory digestion pace: The rate at which current social inventory is consumed will be a critical leading indicator for price direction.

• DRC export policies: The impact of the DRC's extended temporary ban on cobalt exports will gradually manifest in tighter global supply if enforcement remains strict.

• Seasonal demand patterns: Traditional demand recovery as temperatures moderate in September-October could provide support for prices if it materializes as expected.

• Battery sector procurement: Changes in purchasing patterns from battery material manufacturers will be particularly influential, as this sector represents approximately 65% of total cobalt demand.

"The cobalt market is particularly sensitive to inventory levels, with price momentum historically accelerating once inventory drops below a three-week supply threshold," notes a recent SMM market analysis report (July 11, 2025).

The current market consensus suggests that if inventory reduction proceeds as expected and demand recovery materializes in early Q4, cobalt prices could see significant upward movement, potentially testing the 300,000 yuan/mt level by year-end.

How Has the Cobalt Price Trend Evolved in 2025?

The cobalt market has demonstrated remarkable volatility and strength during the first half of 2025, with price trends reflecting the complex interplay of supply constraints, demand fluctuations, and inventory dynamics.

First-Half Performance Analysis

The cobalt market has shown significant price appreciation during the first half of 2025:

• Average spot price of refined cobalt reached 249,250 yuan/mt as of June 30, according to SMM data
• This represents an increase of 78,750 yuan/mt from 170,500 yuan/mt at the end of 2024
• Overall price appreciation of 46.19% during this six-month period
• Second quarter average cobalt price rose to approximately 240,000 yuan/mt, up from an average of 190,000 yuan/mt in Q1

This price performance has unfolded in distinct phases:

1. January-February: Gradual price recovery from 2024 lows, driven by improved sentiment and expectation of demand recovery
2. March-April: Accelerated price increases following initial announcement of DRC export restrictions
3. May: Price consolidation as the market digested earlier gains and assessed actual supply impacts
4. June: Renewed upward momentum as inventory began showing signs of tightness in certain products
5. Early July: Mixed performance with refined cobalt prices fall while cobalt salts maintain strength

This pattern reflects the market's ongoing process of finding equilibrium amidst changing supply-demand fundamentals and regulatory developments.

Supply-Side Developments

Several supply-side factors continue to influence market dynamics:

• DRC export restrictions: The DRC's announcement of a further three-month extension of the temporary ban on cobalt exports from certain operations has created uncertainty about global supply availability.

• Indonesian production ramp-up: Huayou Cobalt's projected production of 20,000 mt of cobalt by-products from its nickel hydrometallurgy project in Indonesia (with attributable amount estimated at 12,000 mt) represents significant new supply entering the market.

• Processing economics: Processing profits are expected to increase under rising price conditions, potentially incentivizing greater production from existing capacity.

• China's domestic production: Chinese refiners have increased utilization rates in response to improved profitability, with average operating rates rising from 62% in January to 78% by June.

• Artisanal mining response: Higher prices have stimulated increased activity in the artisanal mining sector in the DRC, partially offsetting the impact of formal export restrictions.

These supply-side developments highlight the dynamic nature of the cobalt market, where supply responses to price signals and regulatory changes can significantly impact market balances and price trajectories.

FAQ: Understanding the Cobalt Market

What is causing the divergence between refined cobalt and cobalt salt prices?

The price divergence stems from different supply-demand dynamics affecting these

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