1. Trend analysis

According to SunSirs data monitoring: Cobalt prices surged in May, and the cobalt market continued to recover. As of May 31, the price of cobalt was 255,666.67 yuan/ton, an increase of 6.31% from the beginning of the month, the average price of cobalt price was 2,450,500.00 yuan/ton. Cobalt market prices rose sharply in May.

Mobile phone sales increase

According to data from the China Information and Communications Research Institute, in April 2020, the overall domestic mobile phone market shipments were 41.728 million units, an increase of 14.2% year-on-year. In April, mobile phone sales were the highest monthly sales in 19 years. Mobile phone sales rose sharply year-on-year in April. Demand for mobile phones picked up, which significantly supported the demand for cobalt.

New energy vehicle production and sales pick up

According to statistics from the China Association of Automobile Manufacturers, in April 2020, the production and sales of new energy vehicles were 80,000 and 72,000, respectively, up 31.6% and 9.7% sequentially, down 22.1% and 26.5% year-on-year. Although affected by the decline in subsidies, the production and sales of new energy vehicles in April were still declining year-on-year. However, compared with the previous month, the domestic new energy vehicle market environment has obviously recovered, and the demand for the cobalt market has risen, which is good for the increase in cobalt prices.

Policy related

According to Bloomberg News, the European Commission will promote the transformation of the automotive industry to electric vehicles. The European Commission is considering providing incentives to automakers to encourage automakers to produce and sell clean cars. Policies promote the development of the electric vehicle market and increase the demand for cobalt in the future.

At 9 a.m. on May 22, the third session of the 13th National People's Congress opened, and Premier Li Keqiang gave a government work report. The report pointed out that it will focus on supporting the development of a new generation of information networks, expanding 5G applications, building charging piles, promoting new energy vehicles, stimulating new consumer demand, and helping industrial upgrading. Promoting the development of new energy vehicles is the basic policy of the country, but the decline of state subsidies has forced the upgrade of the new energy vehicle industry. During the upgrade of the new energy vehicle industry chain, the demand for cobalt city will slow down. The benefits of Cobalt City are limited.

Market summary

SunSirs data analysts believe that both mobile phone sales and new energy vehicle production and sales rose sharply in April, and demand for the cobalt market picked up. The EU's policies to promote the development of new energy vehicles, and the government report on the development of new energy vehicles in the National People's Congress meeting, are good for the future market of cobalt. In general, the good news from the cobalt market continued in May, which stimulated the cobalt price to fluctuate and rise.

But behind the good news in May, there is always a taste of false prosperity, and the risk of a decline in the future cobalt market still exists. The sales of new energy vehicles and mobile phones soared in April, partly because of the retaliatory consumption caused by the backlog of previous consumption, which was not sustainable. It is expected that consumption will return to normal by the end of May, and even some weakness will occur. The favorable policies are difficult to achieve real growth in the short term, and global demand is weak. According to Bloomberg New Energy Finance, global electric vehicle sales will decline by 18% year-on-year to 1.7 million units in 2020, while global mobile phone sales are expected to decline by at least 10%. New energy vehicle sales and mobile phone sales are expected to decline. Cobalt market demand is expected to plummet. Short-term demand recovery is difficult to cover the weak market demand.

Overall, the cobalt market was stimulated by the good news in May, and the cobalt price fluctuated and rose. However, the market outlook for the cobalt market is lacking momentum, and it is expected that the cobalt price will stabilize in June.

Related listed companies: Huayou Cobalt (603799), Hanrui Cobalt (300618), Luoyang Molybdenum (603993).

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