PRICING NOTICE: Proposal to amend specifications of cobalt hydroxide assessments

Fastmarkets is proposing to make changes to the specifications of two cobalt hydroxide assessments it initially launched in February 2019.

The two assessments are the cobalt hydroxide payable indicator, min 30% Co, cif China, % payable of Fastmarkets’ standard-grade cobalt price (low end), and the cobalt hydroxide index 30% Co min, cif China, $/Ib.

Following an initial consultation among market participants, Fastmarkets is planning to amend the related specifications in terms of chemical components, mine origin of material and publication frequency.

Fastmarkets proposes to tighten the chemical specification of two cobalt hydroxide assessments by adding additional requirements on certain key chemical components. Namely, Fastmarkets intends to only consider data relating to units with a maximum 6% of manganese and magnesium; a maximum 5% of silicon and 100ppm of cadmium within its price assessments. The eligible minimum content requirement for cobalt will remain unchanged at 30%.

In addition, Fastmarkets is going to add the limitation concentration of natural radioactivity of the units into detailed chemical specification. Namely, only materials qualify GB20664-2006 - the national standard of radioactivity in China - will be taken into consideration.

Concurrently, the intention is to widen the limitation of origins of materials by taking into consideration materials produced from large scale mines to cover a wider range of materials that consumers broadly accept. Currently, both Fastmarkets’ cobalt hydroxide assessments only take materials produced in Mutanda, Katanga and Tenke mine into consideration.

The change in origin will mean more data can be considered within the price assessments overall, while the additional requirements on chemical specification mean the indications will still pinpoint a representative price for material broadly accepted by consumers without any need for wide discounts or extra processing.

Furthermore, Fastmarkets is proposing to increase the publication frequency of its cobalt hydroxide payable assessment from twice monthly to weekly. It is suggested that the assessment will be published every Wednesday.

The increased publication frequency will mean the assessment will respond more quickly to changes in payables, due to Chinese consumers’ short-term procurement style.

The pricing frequency of the cobalt hydroxide index will remain unchanged for the time being, since the majority of spot business is still concluded on the basis of a payable percentage of the monthly average of Fastmarkets’ standard-grade cobalt price. Per the methodology of the index, Fastmarkets calculates a corresponding fixed price based on the average low-end price in Fastmarkets’ standard-grade cobalt price assessment for the current pricing month (“M”) if the data is collected as a payable percentage.

The proposed new specifications are listed below, with the proposed amendments in italics:

Assessment: Cobalt hydroxide payable indicator, min 30% Co, cif China, % payable of Fastmarkets’ standard-grade cobalt price (low-end)
Quality: Units produced from large-scale mining activity, with the following chemical composition: Co 30% min, Mn 6% max, Mg 6% max, S 5% max; Cd 100ppm max; limited concentration of natural radioactivity: GB20664-2006 (suitable for customs clearance into China).
Quantity: Min 50 tonnes (cobalt content)
Location: cif China (other terms normalized)
Timing: 45 days
Unit: % payable of Fastmarkets’ standard-grade cobalt price (low end, $/lb)
Payment terms: Letter of credit, current and following price month ('M' and 'M+1')
Publication: Weekly, Wednesday, 3pm London time. (Where the publication day falls on a public holiday in England and Wales, the assessment will be rolled over from previous pricing session.

Index: Cobalt hydroxide index, min 30% Co, cif China, $ per lb
Quality: Units produced from large-scale mining activity, with the following chemical composition: Co 30% min, Mn 6% max, Mg 6% max, S 5% max; Cd 100ppm max; limited concentration of natural radioactivity: GB20664-2006 (suitable for customs clearance into China).
Quantity: Min 50 tonnes (cobalt content)
Location: cif China (other terms normalized)
Timing: 45 days
Unit: $/lb
Payment terms: Letter of credit, current and following price month ('M')
Publication time: 5pm London time, last working day of the month.

The consultation period for the above proposal will end 30 days from the date of this pricing notice, on September 30, with the amended specifications, subject to feedback, taking place on Wednesday October 2 (payable indicator) and October 31 (index).

To provide feedback on the above amendment or if you would like to provide price information by becoming a data submitter to the cobalt hydroxide reference prices, please contact Charlotte Radford and Susan Zou by email at pricing@fastmarkets.com. Please add the subject heading ‘FAO: Charlotte Radford/Susan Zou, re: cobalt hydroxide price assessment.’

To see all Fastmarkets’ pricing methodology and specification documents, please go to www.fastmarkets.com/about-us/methodology.

Charlotte Radford

charlotte.radford@fastmarkets.com

Susan Zou

susan.zou@metalbulletinasia.com

Published

Charlotte Radford

Susan Zou

August 30, 2019

17:10 GMT

Shanghai, London