I. Trend analysis
According to the monitoring data of business associations, cobalt price has risen slightly since mid-July. As of July 31, cobalt price has risen by 5.47% to 228,000.00 yuan/ton, 0.65% lower than that of 229,500.00 yuan/ton at the beginning of the month, 216,166.67 yuan/ton higher than the lowest price of cobalt in mid-month. Cobalt prices first fell and then rose, stop falling and rebound, cobalt market or through the coldest winter, into the recovery rising range.
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II. Market Analysis
1. International Cobalt Price Falling
In July, the cobalt price in LME market fluctuated and fell, and the cobalt price in international market did not perform well. International cobalt market performance is not good, affecting domestic cobalt market, domestic cobalt market is negative.
2. Cobalt prices can’t fall
Cobalt prices have fallen sharply since the summer of 2018. At present, domestic cobalt metal prices have fallen by nearly 70% from the April 2018 high. Shen Wanhongyuan reported that the cobalt price is close to the mining cost at present, unless there is an extreme situation of seizing the market with low prices, it can not fall.
3. The future market of new energy vehicles is not optimistic.
According to the wholesale sales data of passenger car manufacturers, the wholesale sales of new energy narrow passenger cars in June reached 134,000 units, an increase of 90% over the same period last year. From January to June 2019, the sales of new energy passenger cars reached 570,000 units, an increase of 65% over the same period last year. June is the last month of the transition period of the New Deal of Subsidies, which objectively stimulates early consumption and overdraws some future consumption. The surge in sales of new energy vehicles in June does not reflect the real demand of the market, on the contrary, it will restrain the growth of new energy vehicles in the future. Previously, a large part of the driving force behind the sales of new energy vehicles came from subsidies. This year, the subsidies have declined dramatically, and the profit margin of new energy vehicles has dropped to a low level of 2% to 3%. New energy vehicles are facing profit pressures. If prices do not rise in the second half of the year, there will be losses. Once a company loses money, the sales of new energy vehicles in the second half of the year will be full of variables. It is expected that the growth rate of new energy vehicles will slow down in the future, which will be bad for the future cobalt market.
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4. Mobile phone market
In June 2019, the total shipment of domestic mobile phone market was 34.31 million units, down 6.3% from the same period last year; in January-June 2019, the total shipment of domestic mobile phone market was 186 million units, down 5.1% from the same period last year. Sales of mobile phones declined, demand for cobalt declined, which was bad for the cobalt market.
According to the official information of China Quality Certification Center, 8 5G mobile phones have been certified by China Quality 3C. At present, 5G mobile phone manufacturers with three major certificates are making final preparations, the first wave of domestic 5G mobile phone shipment is imminent. ZTE 5G mobile phone officially opened on July 23, Huawei released its 5G mobile phone on July 26, and other mobile phone manufacturers will release their own brand 5G mobile phone in the near future. With the advent of 5G era, the storm of changing planes is bound to come. The demand for cobalt for changing planes will be greatly increased, which is obviously beneficial to the cobalt market. However, due to the recent launch of 5G mobile phones, how the market reaction remains to be investigated, whether it can trigger the switching storm still needs time to test, the demand of cobalt market will not improve significantly in the near future, and the demand of cobalt market will not change much in the near future.
5. The situation in Congo or its influence on cobalt supply
According to Darton Commodities, handicraft production soared during cobalt price increases in 2017 and early 2018, accounting for 20% of Congo’s cobalt production last year. Congolese authorities say the figure is as high as 30%. Many artisanal miners in the Democratic Republic of Congo are now turning their attention to copper, after oversupply caused cobalt prices to plunge by about 70% from their peak. Jacques Kaumbu, president of a mining cooperative in Lualaba province, said that this year, the staff of the Kaumbu cooperative has halved to about 500 people. The cooperative produces only 2,000 tons of ore a month, 15% of which is cobalt, compared with 4,000 tons of cobalt ore and 1,000 tons of copper a year ago. The dramatic decline in manual cobalt mining results in a decrease in the amount of low-cost cobalt in the market and a decrease in the supply of cobalt in the market, which objectively has a positive impact on the rise of cobalt prices.
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3. Future prospects:
Bai Jiaxin, a data analyst for business associations, believes that the domestic cobalt market fell in July, approaching a historic low, and that there is limited room for cobalt prices to fall. The growth rate of new energy automobile power battery installation has been restored, which is good for the cobalt market; in the consumer electronics field, although the previous mobile phone market performance is not good, but with the advent of the 5G era, the consumption expectation in the electronics field has increased; in the supply side, the manual cobalt mining in Congo Kinshasa has dropped dramatically, and the cobalt supply has declined, which has a certain upward trend for the cobalt Market in the future. Force, the recent spread of Ebola epidemic in Congo will also have a certain impact on transport, affecting the supply of cobalt ore. Generally speaking, the cobalt market has little room to fall in the near future, and the decline is incompetent; the demand of cobalt market has not improved significantly, but the expected growth in the future, cobalt market has a certain upward momentum, and cobalt price fluctuation is predicted to rise in the future.