Metal Bulletin will launch a price assessment for cobalt sulfate, 20.5% min Co, ex-works China, published as a $ per lb adjustment to the low end of Metal Bulletin’s existing benchmark low-grade cobalt price assessment.
Cobalt sulfate is one of the key materials used to produce lithium-ion nickel-cobalt-manganese (NCM) and nickel-cobalt-aluminium (NCA) batteries used in electric vehicles (EV).
China is the largest cobalt sulfate producer in the world, and is expected to ramp up its cobalt sulfate production in the next few decades with rising demand from the EV sector.
Metal Bulletin’s low-grade cobalt price assessment has typically been used as the benchmark by Chinese cobalt producers to calculate cobalt raw materials import costs, as a basis for long-term contracts and to make offers to consumers.
But following an initial consultation with the market, it has become clear that there is a vibrant, fixed-price spot market for cobalt sulfate and that most market participants are calculating and negotiating cobalt sulfate prices to take account of refineries’ other production costs, including treatment charges and other raw materials costs.
Therefore, Metal Bulletin intends to provide a regular tracker of China cobalt sulfate price on a spot basis, published as an adjustment to the low end of Metal Bulletin’s low-grade cobalt price, basis 20.5% cobalt content.
Metal Bulletin is seeking feedback from those active in the cobalt sulfate market on the proposed price specification detailed below.
The consultation period for this proposed price launch will end one month from the date of this pricing notice, on April 27, 2018.
The specification, delivery terms and publication timing have been devised following an initial consultation with the market, and are as follows:
Price: China cobalt sulfate, Co 20.5% min, ex-works, adjustment to low-grade cobalt low-end price at Co 20.5% basis, $/lb
Type: assessed range
Currency/unit: USD per lb
Chemical specification: Co: 20.5% min, Ni: 0.001% max, Cu: 0.001% max, Fe: 0.001% max, Zn: 0.001% max
Lot size: one tonne
Payment terms: on bank acceptance (other payment normalized)
Delivery window: within 30 days
Publication: twice a week on Wednesday and Friday, between 2pm and 3pm London time
To calculate the adjustment, spot cobalt sulfate data will be collected in yuan per tonne and Metal Bulletin will use the US dollar sell price published by the Bank of China every Wednesday and Friday at about 3pm Shanghai time.
The formula to calculate the adjustment is as follows:
a. China cobalt sulfate price/1.17/forex rate/2,204.62 = China cobalt sulfate, ex-works, $/lb
b. Metal Bulletin low-grade low-end price x 0.205 = Metal Bulletin low-grade cobalt low-end price at Co 20.5% basis, $/lb
Final premium/discount, $/lb = a-b
For example, on Friday March 23, cobalt sulfate prices were indicated at 138,000-145,000 yuan per tonne, ex works China, and low-grade cobalt prices were assessed at $41.95-43.75 per lb, in-warehouse. The formula for calculating the cobalt sulfate premium/discount would read as follows:
(138,000/1.17/6.3384/2,204.62) - (41.95*0.205) and (145,000/1.17/6.3384/2,204.62) - (41.95*0.205) = a differential between a discount of $0.16 per lb to a premium of $0.27 per lb.