[SMM Cobalt Morning Brief] Weakness in the cobalt industry chain persists, Q3 restocking remains to be seen.

Refined cobalt: At the beginning of this week, spot refined cobalt prices continued to drift lower. Supply side, mainstream smelters lowered their ex-works prices to 360,000 yuan/mt; following the rapid decline, traders raised their spot-futures price spreads to a premium of 1,000-10,000 yuan/mt. Demand side, downstream enterprises are in the midst of summer break, with sluggish purchase willingness, maintaining only minimal restocking for essential needs. Overall, July-August is the traditional consumption off-season for refined cobalt, with limited demand support, and prices are likely to remain in the doldrums in the short term. Intermediate products: At the beginning of this week, cobalt intermediate product prices were stable overall, while the market tug-of-war remained intense. Supply side, some Chinese-invested miners continued to offer based on the European standard-grade refined cobalt low price multiplied by a cobalt hydroxide coefficient, but due to significant divergence in premium coefficient expectations between sellers and buyers, actual order signing was difficult. Demand side, pressured by weaker cobalt salt and refined cobalt prices, downstream smelters' psychological price level for raw materials had further pulled back to around $20-21/lb. In the short term, miners' willingness to hold prices firm persists, but downstream demand support is insufficient, and the tug-of-war between both sides continues. Cobalt sulphate: On Monday, the cobalt chloride market remained sluggish, with no noticeable improvement in inquiry activity and continued sparse signing of orders. Supply side, smelter quotes were mostly stable; however, the current offers largely reflected upstream intentions to hold prices firm, and selling at the quoted price is very difficult. Demand side, the "rush to buy amid continuous price rise and hold back amid price downturn" mentality continued to dominate, leading to cautious purchasing decisions and thick wait-and-see sentiment, while sufficient downstream inventory also contributed to low urgency in procurement. In the short term, prices are likely to continue moving sideways. Cobalt chloride: This week, the cobalt chloride market remained sluggish, with no noticeable improvement in inquiry activity and continued sparse signing of orders. Supply side, smelter quotes were mostly stable; however, the current offers largely reflected upstream intentions to hold prices firm, and selling at the quoted price is very difficult. Demand side, the "rush to buy amid continuous price rise and hold back amid price downturn" mentality continued to dominate, leading to cautious purchasing decisions and thick wait-and-see sentiment, while sufficient downstream inventory also contributed to low urgency in procurement. In the short term, prices are likely to continue moving sideways. Cobalt salt (Co3O4): On Monday, the Co3O4 market remained sluggish, with physical transactions still very limited. Supply side, entering Q3, enterprises generally faced relatively small shipment pressure, concentrated sell-offs receded, and quotes stabilized. Demand side, cathode material producers mainly pushed for lower prices in inquiries and made small-scale purchases on an as-needed basis, lacking motivation for active restocking, and the sluggish market continued to inhibit upstream sales pace. In the short term, Co3O4 trends remain highly correlated with upstream cobalt salt prices and are most likely to move sideways following cobalt chloride. Cobalt powder and others: At the beginning of this week, the cobalt powder market was stable, with mainstream transaction prices holding at 455,000 yuan/mt. Affected by the recent sustained price weakness, downstream maintained a cautious procurement strategy, shortening the restocking cycle to between half a month and one month, with ample room for negotiation on large orders. Raw material side, cobalt carbonate prices were under pressure and approaching the 200,000 yuan/mt mark, with virtually no transactions in the market. The market generally expects a wave of concentrated restocking in August-September, but until then, demand is unlikely to improve significantly, and cobalt powder prices will mainly continue to hit bottom. Ternary cathode precursor: This week, declined. This week, edged up, fell, and held steady. Regarding discounts, for August and Q3 orders, some producers intended to raise the coefficient due to higher sulphate raw material costs. For long-term contracts, some producers' contracts were finalized at the start of the year, and coefficients have not yet been raised; downstream acceptance of coefficient increases in quarterly contracts is also weak, and coefficients remain largely stable with Q2. For spot orders, due to the relatively weak recent performance of nickel and cobalt salt prices, coefficients for August orders are expected to remain stable overall compared to July. Production side, top-tier producers' export orders continued to perform well this month, with production schedules at a high level, and domestic producers' operating rates also recovered slightly from June. Looking ahead, sulphate prices have pulled back recently, and prices for upcoming new orders will hinge on downstream stockpiling pace in Q3. Ternary cathode material: At the beginning of the week, ternary cathode precursor prices were stable, nickel sulphate prices edged up today, while cobalt sulphate and manganese sulphate prices held steady. Regarding discounts, for August and Q3 orders, some producers intended to raise the coefficient due to higher sulphate raw material costs. For long-term contracts, some producers' contracts were finalized at the start of the year, and coefficients have not yet been raised; downstream acceptance of coefficient increases in quarterly contracts is also weak, and coefficients remain largely stable with Q2. For spot orders, due to the relatively weak recent performance of nickel and cobalt salt prices, coefficients for August orders are expected to remain stable overall compared to July. Production side, top-tier producers' export orders continued to perform well this month, with production schedules at a high level, and domestic producers' operating rates also recovered slightly from June. Looking ahead, sulphate prices have pulled back recently, and prices for upcoming new orders will hinge on downstream stockpiling pace in Q3. LCO: On Monday, LCO market trading continued the previous steady but sluggish trend. Co3O4 was overall stable, but lithium carbonate experienced a significant decline this week, leading to some degree of drop in LCO prices. Supply side, production schedules and shipments have not shown significant improvement, and a pessimistic short-term outlook prevailed. Demand side still lacked bright spots, with slight improvement in downstream battery cell manufacturer and terminal orders, but this minor recovery did not reflect in the LCO market due to the rising ternary proportion in consumer products. Sellers and buyers in the current market are still awaiting clearer signals, and future developments will depend on upstream raw material price changes and whether downstream restocking can materially begin. News: [Shengquan Group: Advanced electronic materials fully produced and sold; silicon carbon anode already in mass production] Shengquan Group stated on its interactive platform that its high-end electronic-grade PPO, specialty epoxy, packaging resin, and other advanced electronic materials have basically achieved full production and sales, with existing capacity now essentially fully utilized. It has established long-term, stable cooperation with top-tier CCL and packaging/testing producers. The company has planned a 2,000 mt/year PPO/OPE resin co-production project, a 1,000 mt/year high-end hydrocarbon resin expansion project, and an annual 11,000-ton chip packaging electronic-grade specialty epoxy resin expansion project. The company’s porous carbon for silicon carbon anode has been mass-produced, and its products have entered top-tier consumer electronics battery cell enterprises, with power battery client verification advancing simultaneously. The kiloton-level silicon carbon production line will come online within the year. A 10kt-level hard carbon anode production line has been completed, and both biomass-based and resin-based products have successfully passed certification by leading battery cell enterprises and are being supplied in volume to the energy storage and two-wheeler sodium-ion battery markets. (Jinshi Data APP) [CATL: 587Ah large ESS battery cell now delivered at scale] CATL announced in its investor relations activity record that the company’s combined power and ESS battery sales were up approximately 60% YoY in H1, with ESS battery sales accounting for roughly one quarter. The ESS market is still expected to maintain rapid growth this year and next. In H1, capacity utilization rates were basically saturated, and the company has been stockpiling for customer demand and advancing capacity construction. Domestic ESS sales volume proportion was slightly higher than that of ex-China markets. ESS systems accounted for nearly 70%. The 587Ah large ESS battery cell has achieved large-scale delivery. The company is optimistic about the prospects of the AIDC business and can provide a complete suite of innovative energy solutions. (Jinshi Data APP) [CPCA Secretary General Cui Dongshu: Auto industry profit margin at 3.8% in January-June 2026] CPCA Secretary General Cui Dongshu wrote that the auto industry's revenue from January to June 2026 was 5,189.3 billion yuan, up 1.8% YoY; costs were 4,610 billion yuan, up 2.8%; and profit was 195.4 billion yuan, down 20% YoY. The auto industry's profit margin was 3.8%, which remains low compared to the 6.5% average profit margin of downstream industrial enterprises. In 2026, various regions have vigorously promoted the implementation of the "two new" policy, gradually and effectively unleashing domestic demand vitality. However, the improvement in auto industry efficiency is notably lagging other consumer goods. As the national anti-involution work advances, the auto industry is severely squeezed by upstream sectors, with serious price issues, surging oil prices, and profits at non-ferrous metal and semiconductor companies soaring. End-user car purchase wait-and-see sentiment is strong, automakers' operating pressure continues to mount, and high-quality development has been significantly impacted by the upstream. (Cui Dongshu) (Jinshi Data APP) SMM New Energy Research Team Wang Cong 021-51666838 Ma Rui 021-51595780 Lin Ziya 86-2151666902 Feng Disheng 021-51666714 Lv Yanlin 021-20707875 Zhou Zhicheng 021-51666711 Wang Zihan 021-51666914 Wang Jie 021-51595902 Zhang Haohan 021-51666752 Chen Bolin 021-51666836 Xu Mengqi 021-20707868