Chinese makers of batteries for electric vehicles are demanding steeper discounts for cobalt, which could further cut into margins at Indonesian nickel producers squeezed by rising costs of ore and sulphur, three sources familiar with the matter said.

Traders have mainly borne the impact of discounts until now, but pressure is likely to spread to Indonesian nickel high-pressure acid leach (HPAL) operators when fourth-quarter supply deals are negotiated, two of the sources, both producers, said.

A sustained drop in cobalt revenues could push some higher-cost producers to cut output, they added.

The mixed hydroxide precipitate or MHP made by Indonesian HPAL producers contains both nickel and cobalt used to make batteries.

Buyers are now paying 67% of the cobalt metal price for the cobalt contained in MHP, down from about 90% early last month. The percentage is known as payables.

Battery maker CATL’s raw-material procurement arm Brunp secured MHP at 67%, said two of the sources. Battery-materials producer CNGR Advanced Material bought MHP at around 70%, a separate source said.

All the sources sought anonymity as they were not authorised to speak publicly.

Brunp, CATL, or Contemporary Amperex Technology Company and CNGR did not immediately respond to requests for comment.

PAYABLES SLIDE

Two of the sources said Chinese commodities trader Xiamen Xiangyu was among the first to agree to lower terms, supplying Brunp at about 75%.

Xiamen Xiangyu said the market information gathered by Reuters did not reflect the actual situation, pointing instead to its public disclosures.

Transactions at about 70% and below followed, as traders came under pressure to sell, the sources added.

Several traders and producers said payables of about 90% were unusually high, sustained by tight supplies from Democratic Republic of Congo after the world’s top cobalt producer curbed exports.

They expect payables to keep below the 90% level, even if cobalt metal prices fall.

Payables for cobalt hydroxide, shipped from Congo, have also been falling in recent weeks, as supplies to China recover after a quota system replaced the ban in October.

China’s July imports of cobalt intermediates from Congo stood at 15 970 tons, the highest monthly total since June last year, but still about 67% below July 2024 imports of 48,745 tons and nearly 70% off those of January 2025, the last full month before Congo's export curbs.