SMM July 24 News: Prices of cobalt industry chain products remained generally in the doldrums this week. With the release of import and export data, spot refined cobalt prices fell by 22,500 yuan/mt for the week due to import data exceeding expectations, the demand off-season, and downstream summer breaks. Meanwhile, the cobalt salt market saw sluggish inquiries and transactions, with the market still awaiting the realization of downstream concentrated restocking demand.... SMM has compiled the price changes for cobalt products this week, as follows: : According to SMM spot price data, spot refined cobalt prices drifted lower this week. As of July 24, spot refined cobalt prices fell to 340,000–360,000 yuan/mt, averaging 350,000 yuan/mt, compared to 372,500 yuan/mt on July 17, a drop of 22,500 yuan/mt or 6.04%. According to SMM, at the beginning of the week, impacted by cobalt intermediate product and refined cobalt import data slightly exceeding expectations, futures prices for refined cobalt pulled back sharply, triggering concentrated position reductions by bulls and further accelerating the decline. Mid-week, prices stabilized briefly but lacked momentum for a rebound under the constraint of weak demand, consolidating at lows overall. Supply side, mainstream smelters lowered their ex-factory prices to 365,000 yuan/mt. After the rapid price decline, traders' spot-futures price spread was raised to a premium range of 1,000–10,000 yuan/mt. Demand side, downstream enterprises are in the summer break cycle, with purchase willingness at a low ebb, only maintaining small-scale restocking for rigid demand. Overall, July and August are the traditional consumption off-season for refined cobalt, with limited demand support, and short-term prices may remain in the doldrums. Raw Material—Cobalt Intermediate Products: According to SMM spot price data, spot cobalt intermediate product prices remained stable this week. As of July 24, spot cobalt intermediate product (CIF China) prices were at $23–24/lb, averaging $23.5/lb. Spot market side, the market tug-of-war remained intense in the spot cobalt intermediate product market. Supply side, some Chinese miners continued to quote based on the low-end European standard refined cobalt price multiplied by the cobalt hydroxide coefficient, but actual transactions were difficult to close due to significant differences in psychological price levels for the premium coefficient between upstream and downstream. Demand side, affected by the weakening prices of cobalt salt and refined cobalt, downstream smelter psychological price levels for raw materials have further pulled back to around $21–22/lb. Additionally, the China cobalt intermediate product import data for June released early in the week was higher than market expectations, alleviating concerns about future raw material shortages to some extent and further weakening purchase willingness. In the short term, miners held firm intentions to hold prices, but downstream demand support remained insufficient, with ongoing tug-of-war between both sides. Intermediate product prices were expected to remain stable. Cobalt salts ( and ): : According to SMM spot quotes, cobalt sulphate spot quotes began a continuous decline within the week. As of 24 July, cobalt sulphate spot quotes dropped to 82,000-84,000 yuan/mt, with an average of 83,000 yuan/mt, down by 2,000 yuan/mt from 85,000 yuan/mt on 17 July, a decline of 2.35%. According to SMM, trading sentiment for cobalt sulphate remained sluggish this week. On the supply side, primary smelters maintained high offers, with mainstream enterprises holding firm at 80,000-85,000 yuan/mt. Recycled-material smelters showed relatively stronger willingness to sell, with some enterprises lowering quotes below 78,000 yuan/mt. No significant improvement was observed on the demand side. Top-tier players still held sufficient raw material inventories and had yet to release new procurement demand. Some small and medium-sized enterprises had rigid restocking needs, but influenced by the sharp decline in refined cobalt prices, purchasing sentiment leaned cautious, with intended prices anchored near the 73,000-74,000 yuan/mt cost level for refined cobalt reverse dissolution. A substantial gap with seller offers remained, leading to relatively limited actual transactions. In the short term, cobalt sulphate prices were expected to maintain a consolidating on a subdued note pattern, with a sustained recovery awaiting the realization of concentrated downstream restocking demand. : According to SMM spot quotes, cobalt chloride spot quotes also drifted lower this week. As of 24 July, cobalt chloride spot quotes dropped to 99,000-100,000 yuan/mt, with an average of 99,500 yuan/mt, down by 1,500 yuan/mt from 101,000 yuan/mt on 17 July, a decline of 1.49%. According to SMM, the cobalt chloride market remained sluggish this week, with no significant increase in inquiry activity and order signing still limited. On the supply side, smelters mostly kept their offers stable, though current offers largely reflected the upstream intent to hold prices firm, making transactions at quoted prices very difficult. On the demand side, the "rush to buy amid continuous price rise and hold back amid price downturn" logic continued to dominate, with cautious entry decisions and a strong wait-and-see sentiment. Moreover, downstream inventories were relatively sufficient, resulting in low urgency to purchase. In the short term, prices were expected to maintain a sideways movement. : According to SMM spot quotes, Co3O4 spot quotes remained stable this week. As of 24 July, Co3O4 spot quotes temporarily held steady at 310,000-330,000 yuan/mt, with an average of 320,000 yuan/mt, unchanged from 17 July. According to SMM, in the spot market, the Co3O4 market remained sluggish this week, with actual transactions still very limited. Supply side, entering Q3, shipment pressure on enterprises was generally light, concentrated selling pressure eased, and offers stabilized. Demand side, cathode material plants mainly pushed for lower prices in inquiries and made small purchases based on demand, lacking the motivation to actively restock. The sluggish market continued to constrain upstream shipment pace. In the short term, Co3O4 movements remain highly correlated with cobalt salt prices, and it will likely move sideways alongside cobalt chloride. On the news front, this week, the General Administration of Customs released cobalt product import and export data for June. According to customs data, China's unwrought cobalt imports in June 2026 were about 1,120 mt, up 66% MoM and up 105% YoY. By source, the top three for refined cobalt imports were Indonesia, Russia, and Madagascar, with imports of 476 mt, 293 mt, and 148 mt, respectively. Although China's refined cobalt prices pulled back significantly in June, the export and import window remained completely closed. However, due to weak overseas demand for refined cobalt, some overseas traders still chose to ship refined cobalt to China, leading to a substantial increase in China's imports. The import average price of unwrought cobalt in June 2026 was $52,228/mt, down 4.27% MoM. Cumulative imports in January-June were 7,709 mt, up 118% YoY. On the exports side, China's unwrought cobalt exports in June 2026 were about 503 mt, up 36% MoM and down 46% YoY. By destination, the top three were the US, Taiwan, China, and the Netherlands, with exports of 132 mt, 125 mt, and 66 mt, respectively. The export average price was $59,579/mt, up 11.56% MoM. Cumulative exports in January-June were 2,664 mt, down 76% YoY. China's imports of cobalt hydrometallurgy intermediate products in June 2026 were about 10,961 mt in physical content, up 324% MoM and down 42% YoY. Imports from the DRC were about 10,815 mt in physical content, up 423% MoM and down 43% YoY. The import average price of cobalt hydrometallurgy intermediate products in June 2026 was $16,352/mt in physical content, down 1.54% MoM. Of this month's intermediate product imports, about 7,561 mt in physical content entered Zhejiang and Guangdong via Entrepot Trade by Customs Special Control Area, accounting for 69% of total imports; Ordinary Trade was about 2,849 mt in physical content, accounting for 26%; and processing trade with imported materials was about 550 mt in physical content, accounting for 5%.

SMM Cobalt Morning Briefing: The cobalt industry chain was generally in the doldrums this week. Refined cobalt prices drifted lower, affected by import data exceeding expectations, the demand off-season, and downstream summer breaks. Sellers and buyers of cobalt intermediate products had a wide psychological price spread, making it difficult to advance transactions, and prices remained temporarily stable. Market inquiries and transactions for cobalt sulphate, cobalt chloride, and Co3O4 were sluggish, with downstream users mainly pushing for lower prices and making just-in-time procurement. Cobalt powder prices continued to hit bottom, while cobalt carbonate was also under pressure.

Refined Cobalt: The spot price of refined cobalt continued its downward drift this week. Early in the week, futures prices for refined cobalt pulled back sharply, as import data for cobalt intermediate products and refined cobalt slightly exceeded market expectations, triggering concentrated long position liquidation and accelerating the price decline. Prices briefly stabilized mid-week, but lacked momentum for a rebound due to sluggish demand, overall consolidating at lows. On the supply side, mainstream smelters lowered their ex-works quotations to 365,000 yuan/mt. Following the rapid price drop, traders raised their spot-futures price spread to a premium of 1,000-10,000 yuan/mt. On the demand side, downstream enterprises are currently in their summer break cycle, with purchase willingness remaining sluggish and limited to small-volume rigid restocking. Overall, July-August is the traditional consumption off-season for refined cobalt, offering limited demand support, so prices are likely to remain in the doldrums in the short term. Cobalt Intermediate Products: The price of cobalt intermediate products remained stable overall this week, with a strong market tug-of-war continuing. On the supply side, some Chinese-backed miners continued to quote prices by referencing the low-end price of the European standard refined cobalt multiplied by the cobalt hydroxide payables, but actual transactions were difficult to conclude due to a clear divergence in psychological price level for the premium coefficient between buyers and sellers. On the demand side, affected by the weakening prices of cobalt salts and refined cobalt, downstream smelters' psychological price level for raw materials further pulled back to near $21-22/lb. Additionally, China's cobalt intermediate product import data for June, released early in the week, came in above market expectations, easing some corporate concerns over future raw material shortages and further weakening purchase willingness. In the short term, while miners remain willing to hold prices firm, insufficient downstream demand support means the tug-of-war persists, and intermediate product prices are expected to remain stable. Cobalt Sulphate: The trading atmosphere in the cobalt sulphate market remained sluggish this week. On the supply side, primary smelters maintained high quotations, with mainstream enterprises continuing to hold prices firm in the 80,000-85,000 yuan/mt range; recycling smelters showed a relatively stronger willingness to sell, with some companies lowering quotations to below 78,000 yuan/mt. The demand side showed no significant improvement, as top-tier players still held ample raw material inventories and did not release new rounds of procurement demand. Some small and medium-sized enterprises had rigid restocking needs, but affected by the sharp decline in refined cobalt prices, they maintained a cautious procurement stance, with target prices mostly anchored near the 73,000-74,000 yuan/mt cost of dissolving refined cobalt. The price gap with seller quotations remained large, resulting in limited actual transactions. In the short term, cobalt sulphate prices are expected to consolidate on a subdued note, and a sustained market recovery will need to await the realization of concentrated downstream restocking demand. Cobalt Powder: The cobalt powder market remained in the doldrums this week, with mainstream transaction prices slipping to 455,000 yuan/mt and low-end trader quotations touching the 440,000-450,000 yuan/mt range. Affected by the persistent price weakness, downstream players maintained a cautious purchasing strategy, shortening restocking cycles to half a month to one month, with more flexible bargaining room for large-volume orders. On the raw material side, cobalt carbonate prices were under pressure, approaching the 200,000 yuan/mt threshold, with the market seeing virtually no transactions. The market generally expects a round of concentrated restocking to emerge in August-September. Before then, demand is unlikely to improve significantly, and cobalt powder prices will likely continue to hit bottom in a weak trend. SMM New Energy Research Team Wang Cong 021-51666838 Ma Rui 021-51595780 Feng Disheng 021-51666714 Lyu Yanlin 021-20707875 Xiao Wenhao 021-51666872 Zhang Haohan 021-51666752 Wang Zihan 021-51666914 Wang Jie 021-51595902 Xu Yang 021-51666760 Yang Lianting 021-51595835 Wang Zhaoyu 021-51666827

As of July 21, the operating rate among 50 EAF steel mills mainly producing construction steel nationwide was 36.62%, up 0.04 percentage point WoW; the capacity utilization rate was 36.50%, down 0.06 percentage point WoW; daily average production of construction steel stood at 81,300 mt, down 100 mt WoW.

This week, nickel prices showed a pattern of consolidation and rebound with the center shifting higher. US June CPI and PPI both cooled more than expected, significantly easing market concerns over Fed rate hikes, and the US dollar index fell to a three-week low. At the industry level, Indonesia’s Ministry of Energy and Mineral Resources made it clear that it would not raise nickel ore quotas across the board, only making limited additions for smelters facing raw material shortages, fully correcting the market’s previously priced-in expectations of significantly looser quotas. Meanwhile, the US-Iran conflict continued to escalate, disrupting shipping through the Strait of Hormuz, while risks of sulfur supply disruptions remained. Driven by these three bullish factors, the most-traded SHFE nickel contract broke through the 130,000 yuan/mt mark on July 16, touching 133,000 yuan/mt intraday, while LME nickel concurrently climbed above $17,000/mt and hit a more than three-week high. In the spot market, the SMM #1 refined nickel averaged 129,710 yuan/mt this week, up 1,150 yuan/mt WoW. The Jinchuan refined nickel premium weakened this week, falling to 2,000 yuan/mt, while mainstream electrodeposited nickel discounts were in the range of -300 to -500 yuan/mt. Pressured by rebounding futures prices and the downstream entering the high-temperature off-season, spot transactions were poor this week, and the market was sluggish. On the macro front, in the US, the June CPI eased to 3.5% YoY (prev. 4.2%), and core CPI to 2.6% YoY (prev. 3.3%), both coming in below expectations. The June PPI fell 0.3% MoM, turning negative for the first time this year. After the data release, market expectations for Fed rate hikes were pushed back to October, and the US dollar index weakened under pressure. The US-Iran conflict continued to heat up this week. The US blockaded Iranian ports from July 15, Iran announced the Strait of Hormuz would be “indefinitely closed,” and the Houthis threatened to block the Bab el-Mandeb Strait. Shipping through Hormuz fell sharply, and risks of sulfur supply disruptions continued to grow. In China, GDP grew 4.7% YoY in H1, and in Q2 grew 4.3% YoY and 0.9% QoQ. The central bank said it would step up counter-cyclical and cross-cyclical adjustments to consolidate the positive momentum of stable economic growth. China’s macro policies remained supportive, providing a floor for the commodity market. On the inventory front, on the inventory front, this week, Shanghai bonded zone inventory was around 1,700 mt, flat WoW. China’s social inventory was about 128,000 mt, up 1,600 mt WoW in inventory buildup. From the weekly average price perspective, the nickel price center shifted higher this week, but the sharp pullback on Friday indicates strong resistance above 130,000 yuan/mt. Without fresh bullish catalysts, nickel prices are expected to return to the 125,000–130,000 yuan/mt range and consolidate.

I. DRC Export Quota Policy in H1 2026: Transition from Leniency to Standardization Timeline Key Policies Jan 2026 ARECOMS allowed Q4 2025 cobalt export quotas to be extended to month-end March 2026 Mar 2026 The Ministry of Finance and the Ministry of Mines introduced controls to standardize deviations in cobalt hydroxide metal content detection Apr 2026 ARECOMS allowed Q4 2025 quotas to be extended to month-end April 2026, and Q1 2026 quotas to be extended to month-end June 2026 Jun 2026 ARECOMS revoked unused H1 2026 quotas In H1 2026, the DRC government steadily advanced the standardized operation of the cobalt export quota system. Initially, due to incomplete approval processes and standards, quota issuance efficiency was low, and the government allowed miners to extend unused quotas. As procedures matured, the government gradually shortened extension periods and officially announced the revocation of all unused H1 quotas at month-end June. The DRC government has not yet clarified the carryover rules for H2 quotas, leaving the market with two expected pathways: first, following the Q1 and Q2 approach with quarterly settlements where monthly quotas within a quarter can be flexibly transferred; second, reverting to the original 2025 quota document standards with monthly settlements that strictly prohibit inter-month carryover. This policy uncertainty remains a key supply variable for H2. II. Cobalt Product Prices: Expectations Disappointed, Consolidation and Grinding Lower Through H1 At the start of 2026, the market widely anticipated that the quota system would tighten supply, providing a basis for higher cobalt prices. The actual trend proved the opposite, with overall mt in metal content prices for cobalt products drifting lower . In January, refined cobalt surged then pulled back sharply, weighed by profit-taking, weakening macro sentiment, and broad declines in base metals, before stabilizing at relatively low levels. Other cobalt products did not drop significantly due to stronger raw material cost support but lacked upward momentum and entered a sideways state. From February to March, boosted by positive news, refined cobalt prices briefly rebounded but then re-entered a grind lower channel, pressured by overseas market arbitrage activity, sluggish end-user restocking demand, and financial constraints. Downstream enterprises maintained extremely low raw material inventory, purchasing only as needed. Divergence in the cobalt salt market intensified: upstream held prices firm on bullish expectations, with only some financially constrained enterprises selling at discounts; downstream rejected high-price purchases without order backing, resulting in sluggish transactions. Prices remained broadly steady but biased weaker. From April to May, downstream production schedules and orders continued to underperform expectations. Coupled with relatively sufficient raw material inventories at most enterprises, purchase willingness remained sluggish, with only occasional small-volume deals at low prices. On the supply side, most smelters held prices firm due to high raw material costs, but some recycling smelters and traders cut prices to sell under financial pressure, causing prices to grind lower gradually. In June, the market extended its downtrend, with the price center of all products moving lower. Refined cobalt saw weak end-use demand, while some enterprises faced pressure from mid-year financial reporting and cash collection, leading to persistent selling in spot cargo and futures markets, putting notable downward pressure on prices. Cobalt salts were impacted by weakening production schedules for downstream ternary cathode precursors and Co3O4, with procurement limited to immediate needs and aggressive price pushing, causing transaction centers to decline continuously. Cobalt intermediate products weakened slightly amid the standoff between miners’ firm pricing and sluggish purchasing by domestic smelters, with the decline milder than that of cobalt salts, further squeezing smelting margins. The core logic behind the price decline was a supply-demand mismatch : On one hand, while primary raw materials remained tight, supply from recycling increased substantially. SMM data shows that China’s recycled cobalt salt production (including in-house recycling by battery cell manufacturers) was only approximately 2,000–2,500 mt in metal content in June 2025, surging to around 4,000–4,500 mt in metal content by June 2026, effectively filling the gap in intermediate products. The share of recycling in the cobalt raw material production structure rose from approximately 13% in Q1 2025 to around 34% in Q2 2026. On the other hand, demand was sluggish. SMM estimates that LCO production in 2026 is expected to decline 22% MoM, with downstream purchasing as needed and destocking proceeding slowly. The restocking rally the market had been anticipating never materialized. Against this supply-demand mismatch, the cobalt market remained buyer-dominated over the long term, with prices weakening gradually . III. China Cobalt Product Smelting Margins: Growing Divergence, All Routes Slipping into Loss-Making Territory In H1 2026, margins across cobalt products diverged significantly after a brief spike in January 2026, with most routes subsequently falling into deep losses: Cobalt Sulphate: From late January to March, after downstream restocking ended, purchase willingness weakened and the market entered a stalemate with limited transactions. Cobalt sulphate and intermediate product prices were relatively stable, with margins only affected by exchange rate fluctuations and sentiment, consolidating within a narrow loss range. From April to June, financial pressure intensified on some smelters and traders, who sold at concessions, pushing cobalt sulphate into a grinding downtrend and further compressing production margins. By month-end June, losses for the externally purchased intermediate product route for cobalt sulphate widened to approximately 8,000 yuan/mt. Smelters, aside from executing long-term contracts, showed extremely low willingness to produce for spot orders, with some enterprises maintaining production cuts or suspensions. Refined Cobalt: From mid-January, due to factors such as profit-taking and a weakening macro environment, refined cobalt prices retreated after a rapid rise, with profit margins continuously shrinking. In February–March, despite a brief rebound, prices resumed their decline under pressure from arbitrage and demand falling short of expectations. From April, some enterprises went long on China’s refined cobalt futures, which were perceived as undervalued, leading to some recovery in spot prices, but the smelting sector remained in deep losses. In May–June, cash production costs for both the externally purchased intermediate product route and the externally purchased cobalt sulphate route stabilized in the range of 450,000–500,000 yuan/mt, while spot prices lacked upward momentum due to weak end-user demand and continued position liquidation by traders, with maximum losses approaching 100,000 yuan/mt and significant industry operating pressure. Cobalt Chloride and Co3O4: Before May, downstream acceptance of high prices was low, the market was relatively calm, prices held steady, and profits were only slightly affected by exchange rate fluctuations. In May–June, intermediate product raw material prices remained firm, but some cobalt chloride and Co3O4 enterprises, under pressure from cash flow and performance, sold at lower prices, causing profits to fall sharply. Among these, downstream demand for Co3O4 was weaker, and the price cuts were larger than those for upstream cobalt chloride, resulting in a significant narrowing of profits for the route that purchases cobalt chloride externally. IV. China’s Cobalt Resource Supply-Demand Balance: Destocking Continues but Pace Slows In H1 2026, China’s cobalt resource market remained in a destocking channel, but the destocking speed gradually slowed. Intermediate Product Imports: The DRC announced a quota export policy in mid-October 2025, but due to delays in the approval process, actual imports of intermediate products into China in H1 2026 are expected to be only about 5,000 mt in metal content (with about 2,000 mt in June). MHP Imports: In February this year, a Middle East geopolitical conflict triggered a sulphur supply crisis, delaying the commissioning of new Indonesian MHP hydrometallurgical projects and reducing output from existing projects. China’s MHP imports in H1 2026 are expected to be only about 15,000 mt in metal content. Domestic Production: Against the backdrop of raw material shortages, enterprises had a strong willingness to utilize recycled materials; China’s domestic production (including domestic ore and recycling) in H1 was about 21,000 mt in metal content. Smelting Demand: Affected by raw material shortages and losses for most products, a large number of smelters cut production or suspended operations, with cobalt smelting demand in H1 at about 65,000 mt in metal content. Overall, the H1 supply-demand gap was about 23,000 mt in metal content. The destocking trend remained intact, but the marginal intensity had weakened significantly compared to H2 2025. V. H2 Outlook: Supply recovery expectations are strong, but uncertainties remain Supply side, multiple sources of incremental growth are expected in H2: high production schedules at battery cell enterprises will generate large volumes of production waste, leaving room for further increases in recycled output; while the Strait of Hormuz crisis has not been fully resolved, sulfur transportation has slowly recovered and MHP output from Indonesia hydrometallurgy plants is expected to rebound, which will drive a corresponding increase in China’s imports; moreover, quotas accumulated in Q4 2025 and H1 2026 will gradually arrive at ports, and intermediate product imports will also slowly recover. Demand side, as raw material supply improves, cobalt salt smelters will gradually resume production, and even some idled refined cobalt smelters that have been out of operation for an extended period could be restarted. However, against a backdrop of generally weak end-use demand, the incremental demand is expected to struggle to absorb the new supply, and the market may return to an inventory buildup pattern. Two major uncertainties require close attention: Sustainability of recycled output growth: The high recycled output in H1 was largely driven by strong economics, with many smelters increasing imports of overseas black mass and drawing down domestic scrap inventories. Recently, however, cobalt salt prices across grades have fallen faster than raw material prices, eroding recycling and smelting margins. If black mass imports pull back, recycled supply could fall short of expectations. Miners holding prices firm and controlling circulation volumes: Miners currently remain strongly inclined to keep prices firm. If they restrict circulation volumes to maintain prices, actual intermediate product port arrivals into China could come in below current market expectations, thereby slowing the pace of inventory buildup or even tightening the supply-demand balance again. Overall, the tug-of-war between sellers and buyers in the cobalt market will become more complex in H2 2026. The direction of supply recovery is largely certain, but the extent and pace will be heavily disrupted by policies, geopolitics, and corporate behaviors, while any demand recovery will hinge on a tangible recovery in end-use orders . Xiao Wenhao 16621140365

SMM Nickel, July 13: Macro and market news: (1) On the 12th local time, US President Trump said the US had launched a "heavy strike" against Iran the previous night. There were conflicting statements about the navigation status of the Strait of Hormuz. The Iranian Ports and Maritime Organization of the Persian Gulf posted on social media on the 12th that the Strait of Hormuz was currently impassable. Trump, however, said, "As far as the United States is concerned, the Strait of Hormuz remains open." (2) Premier Li Qiang presided over a State Council executive meeting to hear a report on the progress of building a digital China and to study the cultivation of emerging pillar industries. Spot market: On July 13, SMM #1 refined nickel price fell by 250 yuan/mt from the previous trading day. In terms of spot premiums, the average premium for Jinchuan #1 refined nickel was 2,150 yuan/mt, down 100 yuan/mt from the previous trading day, while domestic mainstream brand electrodeposited nickel ranged from -300 to 500 yuan/mt. Futures market: The most-traded SHFE nickel 2609 contract edged down in the morning session, closing at 128,030 yuan/mt as of the morning close, up 0.02%. Over the weekend, the US-Iran conflict took another turn, with the dollar and crude oil rising in tandem, weighing on metals. However, Indonesia's Ministry of Energy and Mineral Resources officially announced on July 10 that it would no longer raise the national nickel ore mining production quota across the board, and any increase in quotas would be very limited, with a strict special approval channel set up only for local smelters facing severe raw material shortages. In the short term, nickel prices could rebound, with the most-traded SHFE nickel contract price expected to trade in a range of 127,000-133,000 yuan/mt.

Price Trends In the first half of 2026, domestic lithium hydroxide prices followed a trajectory of "surge – high-level volatility – softening decline," with the price center first rising and then falling amid the interplay of multiple factors. January: Prices surged sharply. Concentrated maintenance shutdowns at major lithium salt producers tightened spot supply. Combined with persistently rising costs of lithium carbonate and lithium ore, lithium salt producers held firm on pricing, pushing the monthly average price up by 65% month-on-month. Although ternary material manufacturers maintained just-in-time procurement and remained cautious on spot orders, and some import flows returned due to domestic-international price spreads, the phase of supply shortages and cost support still drove prices to a high level. February: Prices fluctuated at high levels with thinning trading. Macro sentiment drove overall lithium prices downward, but producers' firm pricing stance persisted. Downstream ternary manufacturers, having ample inventories and some entering maintenance, saw eased raw material shortages, with procurement mostly based on monthly average prices. During the Chinese New Year holiday, transportation of lithium hydroxide, classified as hazardous chemicals, stalled, leading to a seasonal quiet period; post-holiday restocking demand was tepid, limiting upside momentum, and prices oscillated widely throughout the month. March: Gains narrowed notably. Cell manufacturers' offtake fell short of expectations, and new orders for ternary materials were limited. Additionally, increased customer-supplied materials in mid-month sharply reduced spot demand, leading to subdued trading and an upward price channel that stalled. The monthly average price rose only 3.4% month-on-month. April: First down then up. In the first half, limited new ternary orders and scarce spot demand put mild pressure on prices; in the second half, pre-holiday stocking and new orders drove increased inquiries from ternary producers, while sharp rises in lithium carbonate and ore prices pulled lithium hydroxide higher. The monthly average price rose 2.73% month-on-month. May: Rose then fell. In the first half, positive demand expectations and supply-side disruptions lifted lithium carbonate and ore prices, pulling lithium hydroxide higher in tandem; in the second half, sentiment turned weaker, with more trades settled via negotiation between traders and material mills. As ternary demand trends became clearer, upstream producers softened their price support, prompting a modest pullback. The monthly average price reached RMB 174,000/ton, up 13.6% month-on-month. June: Prices fell notably, with range-bound volatility intensifying. Frequent supply disruptions on the lithium resource side amplified market volatility significantly, prompting holders to adopt a cautious stance and quote prices in line with market conditions. Upstream producers adjusted prices flexibly, while traders maintained a high discount (over RMB 15,000/ton against the lithium carbonate futures main contract). On the demand side, total ternary material demand remained weak month-on-month, but within the RMB 135,000–145,000/ton range, downstream buyers showed strong willingness to stockpile on dips, providing some bottom support and exacerbating range-bound fluctuations. The monthly average price fell 11.52% month-on-month. Looking at the price trends, the correlation between lithium hydroxide prices and lithium carbonate futures prices has strengthened over the past six months. This is partly because upstream producers use a "lithium carbonate price × discount factor" formula as a floor price in their pricing. On the other hand, traders capitalize on the price spreads between domestic and overseas lithium hydroxide and between hydroxide and carbonate, by importing lithium hydroxide and pricing their sales with reference to lithium carbonate futures, further reinforcing this price linkage. Production In the first half of 2026, domestic total lithium hydroxide output reached 172,000 tons, up 21% year-on-year, driven by relatively robust downstream demand, with notable incremental growth. By output structure, the refining segment contributed the most, accounting for about 88%. Within this, the gradual ramp-up of new production lines at leading companies added some volume, while other enterprises maintained steady output backed by downstream orders, resulting in an 18% year-on-year increase for the overall refining segment. For the causticization segment, most active producers sustained stable operations, and the industry CR5 reached 72% in the first half, indicating a persistently high market concentration. From the capacity utilization perspective, although some capacity has been switched to lithium carbonate production, the operating rate for the lithium hydroxide industry has consistently lingered below 50% over the past six months, reflecting an ongoing overcapacity trend. Costs and margins: For the refining segment, lithium ore feedstock remained relatively tight in the first half of 2026, with ore prices staying elevated and closely correlated with lithium carbonate prices, providing strong cost support for lithium hydroxide. As a result, non‑integrated producers faced notable pressure on the sales side, and their product discount prices did not decline further, which in turn provided marginal support for profit margins at current price levels. For the causticization segment, the supply of salt‑lake‑based lithium salts has increased over the past six months, making causticization feedstock relatively ample. The linkage between actual procurement costs and industrial‑grade carbonate quotes has weakened, which has alleviated cost pressures for enterprises that purchase lithium carbonate externally, leading to actual profitability in the causticization segment being better than theoretical estimates. Import and Export The import‑export landscape has seen a notable reversal. On the export front, since the second half of 2025, some overseas ternary material producers have shifted to entrusting domestic tolling processors, resulting in products that would have been exported being delivered domestically instead, effectively suppressing export volumes. At the same time, overseas demand for ternary materials has remained persistently weak, reducing foreign buyers' appetite for Chinese lithium hydroxide. This, combined with the gradual ramp‑up of overseas local production lines, has collectively kept export volumes at low levels over the past six months. On the import side, weak overseas demand, high accumulated inventories, and arbitrage opportunities have driven import volumes to remain relatively elevated, further reinforcing the net import trend. Supply‑Demand Balance and Inventory The surge in import data made most months in the first half of the year oversupplied. However, from the perspective of directly usable lithium hydroxide products, the market as a whole remained in a relatively tight balance, providing effective support for upstream price control. As for inventory, current lithium hydroxide stock levels have improved significantly compared with the same period last year. This is mainly attributable to two factors: first, part of the inventory has been absorbed into the market by being converted into lithium carbonate; second, active producers have flexibly adjusted their output pace, keeping current inventory days at around one month. Future Outlook Looking ahead, although the LFP route continues to squeeze the ternary route, ternary materials currently have no rival in the high‑nickel segment. In addition, the cost advantages of 6‑series materials offer more possibilities for the ternary route. Based on end‑user production schedules, ternary power demand in the second half of 2026 is expected to maintain a sound performance, growing by approximately 36% compared with the first half. This will drive a roughly 7% sequential increase in ternary material output in the second half. As ternary materials continue to move toward higher nickel content, this brings an incremental demand trend for lithium hydroxide. Meanwhile, considering that most lithium hydroxide production lines have flexible switching or carbonation purification capabilities, lithium hydroxide output is projected to grow by about 6% sequentially. Coupled with a modest recovery in overseas ternary demand, the supply‑demand balance for lithium hydroxide is expected to remain tight through 2026–2027. In terms of price, under a market structure with highly concentrated supply, lithium hydroxide prices are primarily determined by the supply‑demand dynamics of its own industrial chain and closely track lithium ore and lithium salt price trends. Prices are currently oscillating in a range above RMB 150,000/ton. Futures Developments As for lithium hydroxide futures, there has been a flurry of related developments in the second quarter. The Guangzhou Futures Exchange (GFEX) and the Lithium Branch of the China Nonferrous Metals Industry Association have both explicitly stated that they will continue to strengthen cooperation and jointly advance the listing of lithium hydroxide and other lithium‑chain futures products. The征求意见稿 of Guangzhou's "15th Five‑Year Plan" for finance also clearly supports GFEX in listing new‑energy futures such as lithium hydroxide. On the industrial side, companies have moved swiftly to follow up. In June, Yahua Group, Shengxin Lithium Energy, and Tianqi Lithium all announced their intention to apply to GFEX for designated delivery factory warehouse status for lithium hydroxide. In addition, Milkyway's shareholders' meeting approved a proposal for its subsidiary to apply to become a designated delivery warehouse for battery‑grade lithium hydroxide at GFEX. According to media reports, lithium salt producers (Ganfeng Lithium, Tianqi Lithium, Yahua Group, etc.) have already positioned themselves in the factory‑warehouse system. However, due to the high‑risk storage requirements of lithium hydroxide—such as strong corrosiveness, exothermic reaction with water, and the need for inert gas protection—no logistics‑focused player had previously entered this category. On the market front, some traders have already made early arrangements in anticipation of futures listing, and the number of merchants participating in lithium hydroxide import trade has noticeably increased. In summary, preparations for the listing of lithium hydroxide futures are progressing in an orderly manner, with positive official signals and accelerating industrial infrastructure development.

Indonesia’s Ministry of Energy and Mineral Resources (ESDM) said there will be no broad increase in national nickel production quotas, except for limited additions to support smelters that still face raw material shortages. Director General of Minerals and Coal Tri Winarno said any additional allocation would be relatively small, as the government aims to prevent excessive supply in the global market and avoid further pressure on nickel prices. Mining companies may submit RKAB revision applications until July 31, 2026, in line with Ministerial Regulation No. 17/2025. However, ESDM stressed that all proposals will undergo detailed review and will not be automatically approved.

SMM, July 10: This week, the supply of secondary crude lead continued to tighten. Smelters in multiple regions voluntarily cut production, weighed down by raw material shortages and losses on production. Insufficient supply of scrap batteries led most suppliers to hold back from selling, leaving only a small volume of circulating cargo in the market. The battery downstream was in the traditional consumption off-season, with manufacturers only making just-in-time procurement. Price negotiations between buyers and sellers remained difficult, and spot cargo transactions were sluggish. Next week, the raw material shortage is unlikely to ease, and with extreme weather forcing production halts at some smelters, the supply of secondary crude lead will further decline, supporting prices that are more likely to rise than fall.