The price of cobalt metal in China continued to drift lower in the midweek session on Wednesday October 31, prompting some producers to consider cutting output to mitigate losses. Fastmarkets MB’s Chinese domestic cobalt metal price dropped by 3.3% to 430,000-450,000 yuan per tonne ($24.15-25.28 per lb China VAT-free) on Wednesday, from 445,000-465,000 yuan per tonne on Friday. Local cobalt futures prices plunged on Monday, triggering panic sell-offs in the spot market since the start of this week. The November cobalt contract price on the Wuxi Stainless Steel Exchange, a local platform which offers hedging tools for cobalt, fell to 344,000 yuan per tonne on October 29, down almost 9% from last Friday’s close. The November contract price had inched back up to 358,000 yuan per tonne in the morning of November 1.

Jinchuan brand cobalt was traded and offered around 430,000-450,000 yuan per tonne midweek, while imported cobalt metal, such as Chambishi brand, was offered at about 450,000 yuan per tonne.

Buying appetite for imported metal has declined quickly in the past year with many consumers changing their feedstock to Chinese-produced cobalt metal due to the higher prices for imported material.

“Half of the consumers who used to purchase Chambishi have completely changed their feedstock,” a cobalt trader said.

“There is almost no spot liquidity for Chambishi cobalt metal,” a second trader said.

Yet trading activity for Jinchuan cobalt metal is also thin because suppliers are holding back from offering to avoid losing money during the price dip.

“The official quotations for Jinchuan cobalt metal from its producer, Jinchuan Group, is still steady at 450,000 yuan per tonne. Therefore, it is very hard for suppliers to agree to any bids aggressively lower than that level,” the first trader said.

“Availability of cobalt metal in the spot market is not that large as the majority of producers don’t want to sell,” the second trader said.

Chinese cobalt metal, besides Jinchuan cobalt, was traded below 400,000 yuan per tonne, with some panic selling bringing deals down to as low as 350,000 yuan per tonne this week, Fastmarkets learned. Meanwhile, some producers are considering cutting their production to minimize losses, following weak demand and low spot prices, they told Fastmarkets.

“We are planning to cut metal production in the near future, but we haven’t decided when and how much production will be cut,” a producer source told Fastmarkets, adding that current spot prices were too low for them to maintain any margins.

A production cut in China could give the domestic cobalt metal some temporary relief, market sources told Fastmarkets.

“The cobalt stocks on the Wuxi Stainless Steel Exchange are falling, and certain producers intend to cut production. So the Chinese cobalt price downsides might be capped,” a third trader said.