I. trend analysis
According to the data monitoring of the business agency, since October, the cobalt market has suddenly lost its upward momentum, and the domestic cobalt price has been fluctuating and falling, which continued to the middle of November. As of November 16, the price of cobalt was 265500.00 yuan / ton, down 11.60% compared with the average price of 300333.34 yuan / ton on October 1. Cobalt market began to be bearish in October, and the price of cobalt continued to fall. Recently, the market was stimulated by the good news, and the price of cobalt may start to rise again.
II. Market analysis
Spot cobalt price in LME Market
It can be seen from the figure that from September, the spot cobalt price of LME has been stable after fluctuating and falling. From mid October, the price of cobalt has been stable after fluctuating and falling. In the past month, the price of cobalt in LME has been stable, the price of cobalt in international market has been stable, and the downward pressure of cobalt market has been weakened.
LME market March future cobalt price
It can be seen from the figure that in November, the price of cobalt in March futures of LME market fluctuated sharply and fell, and the price of cobalt dropped sharply. The speculation capital withdrew from the market, and the price of cobalt in the later market surged under the influence of supply and demand. The space for the decline of cobalt in the later market is limited, and the market speculation capital may increase. The future cobalt market is more likely to rise.
Automobile market
On November 11, the China Automobile Industry Association released the data of new energy vehicle production and sales in October. In October, the production and sales of new energy vehicles were 95000 and 75000 respectively, down 35.4% and 45.6% compared with the same period last year. From January to October, the production and sales of new energy vehicles completed 983000 and 947000 respectively, an increase of 11.7% and 10.1% over the same period of last year. At present, the new energy market is still in the period of adjustment after the recession, and the impact of the low price of second-hand new energy vehicles is superimposed. In the second half of last year, the continuous pull up of pure electric vehicles did not appear this year. The poor production and marketing of new energy vehicles is the main reason for the low performance of cobalt Market in the near future, but the performance of new energy vehicle market in the future is still worthy of expectation.
In October, the retail sales of the national passenger vehicle market reached 1.843 million units, down 5.7% year-on-year. From January to October this year, the retail sales of narrow sense passenger vehicles dropped 8.3% year-on-year. In October, the retail sales rose 3.5% month on month, similar to the trend in October 2018. The terminal consumption was tepid and the consumer demand was not strong. Retail sales in October are still weak, mainly due to insufficient consumption demand and weak winter recovery trend. The ability and confidence of consumers to buy cars are temporarily affected. In the near future, the downward pressure on exports has increased. With the price of pork and other necessary consumer goods rising, the basic living consumption level has improved, the structural squeeze on Residents’ consumption has increased, and the consumer enthusiasm for optional consumer goods such as automobiles is not high.
Domestic mobile phone shipments are basically the same as last month
According to the data of China Academy of communications, in October 2019, the total shipment volume of domestic mobile phone market was 35.969 million, down 6.7% year on year and 0.7% month on month; in January October 2019, the total shipment volume of domestic mobile phone market was 323 million, down 5.8% year on year. Domestic mobile phone sales are relatively stable, and the demand for cobalt for mobile phones is declining, but the future development is still optimistic. The sales volume of 5g mobile phones in October was 2.494 million, with an optimistic growth rate. 5g mobile phone is about to break out, and the trend of 5g mobile phone switching may come in advance, which will bring a substantial increase in mobile phone sales. The mobile phone market is optimistic about the future cobalt demand.
The policy of development plan for new energy vehicles in 2021-2035 is favorable
On November 7, Luo Junjie, deputy director of the equipment industry department of the Ministry of industry and information technology, said at the China Automobile Industry Development Forum held during the second China International Import Expo that the Ministry of industry and information technology is taking the lead in preparing the development plan for new energy vehicles in 2021-2035. Facing the development of new energy vehicles in 2035, the plan focuses on “four modernizations”, namely, electrification, intelligence, networking and sharing. The Ministry of industry and information technology, together with relevant departments, has made great efforts to solve the key problems of road test, application of automatic driving map, construction of network infrastructure and intelligent reconstruction of roads. Affected by this news, the new energy vehicle sector was active. The dependence of industrial chain on subsidies will be further reduced and market shuffling will be further accelerated. The risk that the monthly production and sales data of new energy vehicles decrease year on year in the fourth quarter cannot be completely excluded, but the development prospect of new energy vehicle industry is optimistic for a long time.
German government’s efforts to subsidize electric vehicles
Recently, the German government announced to increase the subsidy for new energy vehicles. The German government plans to increase the subsidy for electric vehicle purchase by half in the five years starting from 2020, as the latest in a series of measures to accelerate the adoption of low emission vehicles. The German government plans to increase the subsidy for electric vehicles from 3000 euros to 4500 euros per vehicle, and to 5000 euros for models priced at more than 40000 euros. Germany’s large-scale increase in subsidies for new energy vehicles has a great positive impact on the sales of new energy vehicles. The sales volume of new energy vehicles in the future market is bullish, and the demand of global cobalt market is bullish.
Tesla Shanghai plant starts mass production
On November 13, the Ministry of industry and information technology of China announced Tesla’s mass production license on its website. With this license, Tesla can start mass production of model 3 made in China. According to people familiar with the matter, Tesla’s goal is to produce 17400 Chinese made models 3 at the plant by the end of 2019. Tesla’s large-scale production of new energy vehicles, a surge in demand for cobalt, cobalt market demand is expected to rise substantially in the future.
III. future prospects
Baijiaxin, a data analyst of business agency, thinks that since October, the market heat of cobalt has declined, and the rising power of cobalt market has weakened. On the demand side, the sales of new energy vehicles have fallen month after month, the mobile phone market has not been good for a long time, the demand of cobalt market has fallen, which has a negative impact on the domestic cobalt market, and the domestic cobalt price has fallen in shock. As can be seen from the sales of new energy vehicles and mobile phones in October, the sales of new energy vehicles and mobile phones did not turn better, the demand of cobalt market continued to fall, and the downward pressure of the future cobalt market remained, and it is expected that the recent cobalt price in the future will still fluctuate slightly.
But in the sound of cobalt price drop, we found that the recent positive cobalt market began to focus. The development plan of new energy vehicles for 2021-2035 launched by the Ministry of industry and information technology speeds up the market reshuffle and further reduces the dependence of the new energy vehicle industry chain on subsidies. Affected by the second news, the new energy vehicle sector is active and has a good prospect for the future new energy vehicles for a long time. The mobile phone market is still underperforming at this stage, but 5g mobile phones have strong performance, and the trend of replacement may come ahead of time In the long run, the demand for cobalt in mobile phones is bullish. The German government increased the subsidy of new energy vehicles, which had a great positive impact on the global cobalt market demand, driving the global cobalt price to rise again, and driving the domestic cobalt price to rise. If the impact of the policy is delayed for a long time, the mass production of Tesla’s Shanghai plant will bring real-time demand to the domestic spot cobalt market, and the domestic demand for cobalt market will surge in the future, increasing the momentum of the cobalt market. And with the coming of December, Glencore will stop production, the supply of cobalt market is expected to decline, the relationship between supply and demand may reverse, with oversupply turning into oversupply. Multi positive stimulus, the rising momentum of the cobalt market increased, the cobalt market or the “new rise”.
Generally speaking, the spot market of cobalt market is still in the stage of oversupply, and the driving force of rising cobalt price is insufficient. In the short term, the fluctuation and fall of cobalt price may be relatively large. However, there are many good news in recent cobalt market, and the demand for cobalt Market in the future has a visible rise, and the supply of cobalt market is expected to drop sharply in December. With the stimulation of good news, the turning point of cobalt market price may come, and the cobalt market may regain a “new rise”. Cobalt price is expected to stop falling and pick up in late November, and a good opportunity for investment in cobalt market may have come.