Cobalt futures prices in China surged to their highest level since mid-March on Monday after the Democratic Republic of Congo (DRC) extended its ban on concentrate exports first implemented in February.The most active cobalt futures on China’s Wuxi Stainless Steel Exchange jumped 9% to 254 yuan ($35.34) per kilogram, the highest since March 14th.
The Authority for the Regulation and Control of Strategic Mineral Substances’ Markets (ARECOMS) announced on Saturday that it decided to extend the ban on exports of this electric vehicle battery material by another three months due to persistently high market inventories. The DRC, which supplies over 80% of the world’s cobalt, initially imposed a four-month export ban in February after prices hit a nine-year low. The ban was originally set to expire last Sunday. It is estimated that the ban will reduce market supply by over 100,000 tonnes during the seven-month period.
CMOC Group (SHA: 603993), the world’s largest cobalt miner, stated that the ban will have a limited impact on operations at its Tenke Fungurume and Kisanfu mines in Congo. However, it was reported that the company had previously lobbied for the ban to be lifted. Meanwhile, Glencore, the world’s second-largest cobalt producer, supports the quota system proposed by the DRC. Days after the export suspension took effect, Glencore declared force majeure on some cobalt deliveries.
In January, inflation-adjusted cobalt prices fell to record lows, pressured by a surge in cobalt supply from the DRC (where cobalt is a byproduct of copper mining) and tepid demand from the EV market. Although the EV market surpassed aviation and aerospace as the primary source of demand several years ago, the average price of cobalt sulphate entering China’s EV battery supply chain was just $3,556 per tonne in January. Following the ban, the price jumped 80% to average $6,394 per tonne in May. Despite this increase, cobalt sulphate prices remain far below their 2022 peak of $19,000 per tonne.
Cobalt byproduct output is also rising in Indonesia alongside ballooning nickel shipments. It is reported that the DRC is in talks with Indonesia regarding collaboration on managing cobalt supply, including the potential use of quotas.
