Once battered by oversupply-driven price slumps, cobalt is now regaining investor attention with its price rally. The prices of electrolytic cobalt in China surged 54.4% in the past 11 trading days, jumping by more than 80,000 yuan per ton.
Not just the prices of electrolytic cobalt and other cobalt products jumped, but stocks of listed companies in the sector have also staged a multi-day rally. Compared to the closing prices on February 24, shares of Tengyuan Cobalt, Huayou Cobalt, Hanrui Cobalt, and CMOC (China Molybdenum) closed on Tuesday up by 35.5%, 25.7%, 20.9%, and 11.3%, respectively.
On February 24, the government of the Democratic Republic of Congo (DRC) announced a four-month suspension of cobalt exports, citing concerns over global market oversupply and the need to regulate supply.
Following the announcement, cobalt prices surged. According to data from Shanghai Metals Market (SMM), on March 11, the domestic electrolytic cobalt market price stood at 238,000 yuan per ton, marking an increase of 83,800 yuan per ton compared to February 24.
It’s reported that out of the 19 cobalt mines in the DRC, 15 are operated by Chinese enterprises or have Chinese investment.
An industry insider from a company that has cobalt mining operations in the DRC said that if the export suspension lasts only four months, the impact on their production, supply chain, and existing orders would be limited, however, the DRC government has a clear intent to support cobalt prices, and further measures such as continued price support or additional export restrictions cannot be ruled out.
CMOC said that its mining operations in the DRC currently cannot export cobalt products. Previously, the company had set up a special task force to maintain active communication with the DRC government and industry regulators, closely monitoring policy developments. CMOC stated that production at its TFM and KFM mines is proceeding as usual and that the temporary measure is not expected to have a significant impact on its financial performance.
For the cobalt industry chain, downstream companies are taking a cautious wait-and-see approach, amid expectations that cobalt prices may still have room to rise.
A research report by Minsheng Securities noted that the DRC accounts for about 76% of global cobalt production, while Indonesia accounts for about 10%. The DRC’s four-month cobalt export suspension could reduce global cobalt supply by roughly 25%, potentially shifting the market balance from oversupply to a shortage.
In addition, with cobalt prices previously in a downtrend, industry players had little incentive to stockpile inventory, and it’s estimated that domestic cobalt raw material inventories can sustain for about three months, and supply tightness is unlikely to ease, the broker estimated.
Industry insiders believe that cobalt prices still have room to rise. Bai Qiong, an analyst at Shanghai Metals Market, said that market concerns over long-term supply disruptions of DRC cobalt intermediates have led to stockpiling and hoarding by producers, tightening market circulation and pushing up cobalt product prices rapidly.
The rapid price surge, combined with policy uncertainties, has left many downstream companies hesitant to make purchases, Bai said.
However, Bai noted that instability in the policies at cobalt-producing countries introduces systemic risks to the supply chain’s resilience, which could push some companies to accelerate efforts toward “cobalt-free” battery development.
Minsheng Securities also noted that the DRC’s cobalt export ban is unlikely to be a long-term policy, with a quota system being a more feasible solution and Chinese companies may secure export quotas based on production levels, allowing them to trade volume for price, which could ultimately lift the profitability of the cobalt sector.