China spreads its wings over cobalt

Energodigest | 21 December 2023
The global cobalt market is going through change as more supplies flow into it from top-producing countries, primarily the Democratic Republic of the Congo (DRC), which accounts for 68% of the world’s cobalt ore output (see Fig. 1). Cobalt has lost nearly half (43%) of its value since January of this year and is now trading at $28,700 per tonne, the lowest level in more than three years. Yet supplies continue to flood the market: according to BMI, the DRC is set to boost its shipments by 14% YoY, while deliveries from Indonesia will more than double in 2023.
This growth comes amid the rising output of Chinese-owned companies, which are aggressively expanding into the cobalt market. Chinese producers seem unfazed by the recent price crash, as they expect to benefit from government support.[1] Other producers, by contrast, are standoffish about investing in new mines, with some even having to revise their production targets in response to current events, thus allowing competitors from China to snatch their share of the global mined cobalt market.

Things could also change as the DRC, the world’s largest cobalt producer, moves to buy back some of its prized copper and cobalt deposits in a bid to regain control over crucial green metals, as most of the country’s mines are now foreign-owned.

That said, cobalt supply is set to gain even more speed over the next couple years. Refined cobalt output, as estimated by S&P Global,[2] will rise to 261,000 tonnes next year (see Fig. 2), while consumption, which depends heavily on the battery market, will increase to 244,000 tonnes, leading to a surplus of around 17,000 tonnes. This trend, however, will reverse in 2026, with cobalt demand outpacing supply, and prices the following year are expected to skyrocket 86% above the 2023 average, hitting $64,000 per tonne, the level observed in 2022.

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