Zhejiang Huayou Cobalt Co. Ltd. on March 18 said it has temporarily reduced partial operation of cobalt smelting and recycling lines at its plant in Quzhou, in China's Zhejiang province, since March 17, as the control measures to halt the spread of coronavirus had resulted in uncertainty for raw material supply, and labor employment.
Huayou Cobalt Production and Market Overview
Huayou said the output reduction was a temporary epidemic prevention measure, and would have no negative impact on the company's performance in the long term. The company did not say when production would be restarted.
“It offers an indication that the companies are facing difficulties amid the stratospheric prices of recycled materials as Huayou’s Quzhou point targets recycling,” one Chinese trader said.
“Production is slowing down, but so is demand. The market is just really slow right now,” said an international trader, who emphasized that factories were pushing out lower volumes so that stocks may last longer since spot intermediate supply is almost non-existent at the moment.
Huayou Cobalt, one of China's biggest cobalt producers and processors, generated cobalt products totaling 18,309 mt in the first half of 2021, a year-on-year increase of 26%, according to the company's interim report.
China's cobalt hydroxide and sulfate prices are expected to remain at high levels in the near term due to the cost of raw materials and supply tightness in the domestic market, market sources said.
High Cobalt Prices
Prices for Chinese cobalt sulfate remained high as raw materials prices climbed, although demand has been curtailed as nickel prices have elevated.
S&P Global Commodity Insights assessed daily battery-grade 20.50% Co cobalt sulfate at Yuan 120,000/mt ($18,865/mt) DDP China on March 18, unchanged from March 9, in the Platts Market on Close assessment process.
Concerns over high cobalt prices and an uncertain nickel environment could see nickel-cobalt-manganese (NCM) battery chemistries lose ground in the domestic China market, as producers work to deal with rising cost pressure, market sources said.
