PRICING NOTICE: Proposal to amend the calculation basis for the China cobalt sulfate, ex-works standard-grade adjustment

Fastmarkets proposes to change the calculation basis for the China cobalt sulfate, Co 20.5% min, ex-works adjustment to the standard-grade cobalt low-end price to 100% Co basis from the current Co 20.5% basis.

As part of the consultation, Fastmarkets also proposes to change the name of this assessment to China cobalt sulfate, Co 20.5% min, ex-works, adjustment to standard-grade cobalt low-end price, $/lb

Currently, the premium or discount of the Chinese cobalt sulfate price against the low end of the benchmark standard-grade price is based on a 20.5% Co basis. Following nearly one year of assessing this market, Fastmarkets has received feedback that cobalt market participants prefer to track and assess the dynamics and connection between the Chinese cobalt sulfate and standard-grade cobalt markets and prices as an adjustment on a 100% cobalt metal basis.

Therefore, subject to market consultation, Fastmarkets proposes to amend the name and specification of the assessment as follows:

Price: China cobalt sulfate, Co 20.5% min, ex-works, adjustment to low-grade cobalt low-end price, $/lb
Type: assessed range
Currency/unit: USD/lb
Quality/shape: crystal
Chemical specification: Co: 20.5% min, Ni: 0.001% max, Cu: 0.001% max, Fe: 0.001% max, Zn: 0.001% max
Lot size: 1 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, Fastmarkets will convert the Chinese cobalt sulfate price at 20.5% Co min basis to a full cobalt metal content price, and use the dollar sell price published by the Bank of China every Wednesday and Friday at about 3pm Shanghai time.

The new formula to calculate the adjustment is as below:

a. Fastmarkets Chinese cobalt sulfate price/1.16/forex rate/0.205/2,204.62 = China cobalt sulfate, ex-works, at 100% Co basis, $/lb
b. Fastmarkets low-end standard-grade cobalt price, $/lb

Final premium/discount, $/lb = a-b

For example, on Wednesday March 6, Chinese cobalt sulfate price was assessed at 57,000-60,000 yuan per tonne, and standard-grade cobalt price was assessed at $14.90-15.60 per lb. Under the proposal, the formula for calculating the cobalt sulfate premium/discount would be as follows:

57,000/1.16/ 6.7273/0.205/2204.62 -14.9 and 60,000/1.16/ 6.7273/0.205/2204.62 - 14.9 = a premium of $1.26-2.11 per lb

The current price name and specifications are:

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
Quality/shape: crystal
Chemical specification: Co: 20.5% min, Ni: 0.001% max, Cu: 0.001% max, Fe: 0.001% max, Zn: 0.001% max
Lot size: 1 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

The current formula to calculate the adjustment is:
a. China cobalt sulfate price/1.16/forex rate/2,204.62 = China cobalt sulfate, ex-works, $/lb
b. Metal Bulletin low-grade low-end price x 0.205 = Fastmarkets low-grade cobalt low-end price at Co 20.5% basis, $/lb

Final premium/discount, $/lb = a-b

There is no change on the specifications for the price assessment of cobalt sulfate, 20.5% min Co, ex-works China, yuan/tonne.

The consultation period for the above proposal will end on April 5. Subject to the results of this consultation, the proposed changes take effect on April 10.

In the context of growing scrutiny around the cobalt supply chain, please note that Fastmarkets and Euromoney plc are committed to the Modern Slavery Act.
To provide feedback on this price or if you would like to provide price information by becoming a data submitter, please contact Susan Zou by email at: pricing@fastmarkets.com. Please add the subject heading 'FAO: Susan Zou, re: China cobalt sulfate premium/discount.'

To see all Fastmarkets’ pricing methodology and specification documents go to https://www.metalbulletin.com/prices/pricing-methodology.html.

Susan Zou

susan.zou@metalbulletinasia.com

Published

Susan Zou

March 08, 2019

14:36 GMT

Shanghai