The impact of the Democratic Republic of the Congo's halt on cobalt exports continues to ferment, with domestic prices for electrolytic cobalt, cobalt tetroxide, and cobalt sulfate rising significantly this week. Under the threat of potential raw material shortages, downstream companies have a strong willingness to rush to purchase, and cobalt prices are expected to have further upward momentum.
According to a report from China Galaxy Securities, a turning point in destocking in the Nonferrous Metals Industry during the peak season has been observed. Coupled with expectations for domestic steady growth policies, a spring market is expected to unfold. The report indicates that this week the Nonferrous Metals Industry Index performed strongly, with inventory turning points emerging for major metals such as Copper and Aluminum. The impact of Congo (Kinshasa) halting Cobalt exports continues to unfold, and this week domestic electrolytic Cobalt, Cobalt tetraoxide, and Cobalt sulfate prices have risen sharply. Under the threat of possible raw material shortages in the future, downstream enterprises have a strong purchasing willingness, and it is expected that Cobalt prices will still have upward momentum. Furthermore, domestic electrolytic Aluminum has also reached a destocking turning point, and Aluminum prices are expected to strengthen. With the release of new production capacity, the price of alumina may continue to decline based on lowering bauxite prices, further expanding the profits in the domestic electrolytic Aluminum industry.
The views of China Galaxy Securities are as follows:
Market review: As of the close on Friday, March 7: This week, the SSE Composite Index was +1.56%, reporting 3372.55 points; the CSI 300 Index was +1.39%, reporting 3944.01 points; the SW Nonferrous Metals Industry Index was +7.08%, reporting 4804.50 points. From the perspective of sub-industries, among the five secondary sub-industries in the Nonferrous Metals Industry this week, the changes were +8.43%, +6.48%, +6.10%, +4.58%, and +5.18% for Industrial Metals, Precious Metals, Small Metals, Energy Metals, and New Metal Materials, respectively.
Key Metal Price Data: This week, the Shanghai Futures Exchange Copper, Aluminum, Zinc, Lead, Nickel, and Tin closed at 78,320 yuan/ton, 20,835 yuan/ton, 23,960 yuan/ton, 17,420 yuan/ton, 129,550 yuan/ton, and 262,900 yuan/ton, with changes of +1.70%, +0.90%, +2.00%, +1.46%, +1.94%, and +3.03% respectively compared to last week. This week, the Shanghai Futures Exchange Gold and Silver closed at 679.48 yuan/gram and 8,048 yuan/kilogram, with changes of +0.65% and +1.98% respectively. This week, the prices of praseodymium neodymium oxide, terbium oxide, dysprosium oxide, and sintered neodymium iron boron N35 crude were at 0.4415 million yuan/ton, 6.525 million yuan/ton, 1.71 million yuan/ton, and 115.5 yuan/kg, with changes of -1.12%, +0.31%, 0.00%, and 0.00% respectively compared to last week. The prices of battery-grade lithium carbonate, industrial-grade lithium carbonate, battery-grade lithium hydroxide, and Australian lithium concentrate this week were 75,250 yuan/ton, 73,500 yuan/ton, 75,750 yuan/ton, and 800 dollars/ton, with changes of +0.60%, +0.68%, +3.24%, and 0.00% respectively. This week, domestic electrolytic Cobalt, 0.998MB electrolytic Cobalt, Cobalt tetraoxide, and Cobalt sulfate were priced at 0.2225 million yuan/ton, 14.25 dollars/pound, 0.1775 million yuan/ton, and 0.042 million yuan/ton, with changes of +26.42%, +6.74%, +55.70%, and +44.83% respectively compared to last week.
Investment advice.
As the downstream enters the peak season, the major Nonferrous Metals such as Copper and Aluminum are showing turning points in inventory. Coupled with the defined expectations for steady growth policies from the national two sessions, the foundation for the Nonferrous Metals Industry to start the spring market has already been established.
The domestic antimony export situation has somewhat recovered, and the market-oriented reform of electricity pricing for the New energy Fund has led to a rush in photovoltaic installations, driving up antimony demand. On the supply side, the significant price difference between domestic and overseas antimony has reduced the import of antimony ore, impacting domestic antimony production. Domestic antimony prices have increased by 22% in the past month, breaking through 0.17 million yuan/ton, and showing a converging trend with overseas antimony prices. Considering the remaining price difference of nearly 0.2 million yuan/ton, and the low inventory of antimony products in domestic antimony plants, as well as downstream flame retardant and polyester manufacturers, it is expected that domestic antimony prices will continue to rise.
The impact of the Democratic Republic of the Congo halting cobalt exports continues to ferment. This week, domestic electrolytic cobalt, cobalt tetroxide, and cobalt sulfate prices have surged sharply. Under the threat of potential raw material shortages, downstream companies have a strong purchasing willingness. It is expected that cobalt prices will still have upward momentum, and it is recommended to pay attention to Zhejiang Huayou Cobalt, Tengyuan Cobalt, and Nanjing Hanrui Cobalt.
This week, in the middle of the week, Trump raised the expected tariff on Copper in the USA from the original 10% to 25%, driving up the price of US Copper significantly and widening the price gap with London Copper, thus boosting copper prices in other regions. Due to the widening domestic and overseas price gap, the domestic export window has opened while the import window has closed, combined with the increase in operating rates of downstream processing industries, domestic copper has reached a turning point in inventory reduction. Moreover, ongoing improvements in supply and demand will continue to reduce inventory, supporting domestic copper prices to recover and rise towards overseas copper prices.
Domestic electrolytic aluminum has also reached a turning point in inventory reduction, and aluminum prices are expected to strengthen. With the release of new production capacity, alumina prices may continue to decrease based on lowering bauxite prices, which will further expand the profits of the domestic electrolytic aluminum industry.
Risk Warning
1) The risk that the Federal Reserve's interest rate cuts do not meet expectations; 2) The risk of a significant decline in prices of Nonferrous Metals; 3) The risk that domestic policies do not meet expectations; 4) The risk that US tariff increases trigger a trade war exceeding expectations.
