Chinese battery makers are forcing deeper discounts for cobalt, squeezing margins at Indonesian nickel producers already grappling with rising ore and sulphur costs.

Battery manufacturer CATL's raw-material procurement arm, Brunp, has secured mixed hydroxide precipitate (MHP) at 67% of the cobalt metal price, down from about 90% early last month, according to two sources familiar with the matter.

Battery-materials producer CNGR Advanced Material bought MHP at around 70%, a separate source said.

The percentage, known as payables, determines what buyers pay for the cobalt contained in MHP produced by Indonesian high-pressure acid leach (HPAL) operators.

Traders have mainly absorbed the impact of discounts so far, but pressure is expected to spread to Indonesian HPAL producers when fourth-quarter supply deals are negotiated, two of the sources said. Both are producers who spoke on condition of anonymity because they were not authorised to speak publicly.

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

Chinese commodities trader Xiamen Xiangyu was among the first to agree to lower terms, supplying Brunp at about 75%, two sources said. Xiamen Xiangyu disputed the market information gathered by Reuters, saying it did not reflect the actual situation and pointing instead to its public disclosures.

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

The payables slide comes as supplies of cobalt from the Democratic Republic of Congo recover after the world's top cobalt producer replaced an export ban with a quota system in October. China's July imports of cobalt intermediates from Congo stood at 15,970 tonnes, the highest monthly total since June last year.

That figure remains about 67% below July 2024 imports of 48,745 tonnes and nearly 70% off those of January 2025, the last full month before Congo's export curbs.

Several traders and producers said payables of about 90% were unusually high, sustained by tight supplies from Congo during the export ban. They expect payables to remain below the 90% level, even if cobalt metal prices fall.

Brunp, CATL and CNGR did not immediately respond to requests for comment.