COMMODITIES 2025: Cobalt market oversupply to ease in 2025

The cobalt market's oversupply is expected to ease in 2025, according to market participants, but will still be higher than in 2023, with more Chinese-origin metal coming online in the second half of the year, strong production from the Democratic Republic of Congo and ramped up high-pressure acid leaching projects in Indonesia.

This could be bullish for the market, as prices for Chinese cut cathodes and other non-superalloy grades have remained depressed in 2024; in mid-October, they fell to their lowest levels since late 2015/early 2016.

Platts, part of S&P Global Commodity Insights, assessed European cobalt metal 99.8% Mixed-Use Basket A, inclusive of specific Chinese cut cathode brands, at $9.50/lb IW Rotterdam Oct. 15.

Prices have recovered since, with Platts Mixed-Use Basket A assessed at $10.05/lb Dec. 18, although some market participants expect prices to fall in the first quarter to mid-$9/lb.

In September, Platts reshaped its European cobalt metal coverage to better reflect the pricing dynamics of the European metal market.

The global refined cobalt surplus is forecast to be 28,000 mt in 2025, according to Commodity Insights' November Lithium and Cobalt Commodity Briefing Service report, down from an estimated 53,000 mt surplus in 2024, but still higher than the 21,000 mt surplus of 2023.

Analysts noted in the report that DRC cobalt production growth was tapering lower as China's CMOC Group reached the end of its capacity ramp-ups.

Over January-September, CMOC's DRC operations produced 84,722 mt of cobalt, above its 60,000-70,000 mt full-year output guidance and 127.4% higher year over year.

Commodity Insights forecast the European metal cobalt price to average $10.98/lb in 2025, down from $13.19/lb in 2024 and $16.36/lb in 2023.

"I'm expecting some [super] alloy tightness for 2025 considering production will be down for some of the key players -- there won't be many units floating around," a European trader told Commodity Insights.

"On the lower end of the market, we're expecting to see Chinese cut cathodes floating around $10/lb."

A second Europe-based trader said: "On this alloy-grade tightness for next year, I can see an argument that put that into doubt.

"A certain portion of consumers buying alloy in the US will switch over to Lygend or CNGR, unless something changes on the import duties -- which is always a risk -- so I see part of that demand being substituted so that in itself should alleviate any tightness," he said.

"On the non-[super]alloy metal there will be plenty of material expecting to come out of China, and Indonesian material production will contribute to that."

Period of rebalance

Cobalt Blue Commercial Manager Joel Crane told Commodity Insights that the cobalt market was entering a period of re-balance.

"Output in the DRC surged almost 60,000 mt (around 50% of the total market) since 2022, largely as a result of CMOC's rapid commissioning of Kisanfu," Crane said. "Production growth in the DRC will slow to just 5,000-10,000 mt in 2025 as the pipeline of new and expanded projects dries up."

He added that while Indonesian nickel projects ramped up from around 10,000 mt in 2022 to around 30,000 mt in 2024, momentum was slowing due to the depressed price environment and concerns over environmental stewardship.

"Meanwhile, demand for cobalt in EV batteries continues to grow at a steady pace," he said. "Despite the loss in market share to lithium iron phosphate chemistries, still over half of the world's EVs use nickel/cobalt-baring chemistries."

Crane said average growth for cobalt in batteries was expected to grow 11% annually between 2024-2030, which he described as "a growth profile any commodity will be envious of," while supply would grow just 4%/year over the same period.

He said that while previously EV sales estimates had perhaps been overambitious and therefore slightly lowered, growth remained robust.

"The depressed cobalt price during 2024 takes into account these reductions, so there is unlikely to be any major impact next year," Crane said.

Glencore said in its half-year report that while most producers had maintained output at lower levels in 2024, one had ramped up significantly, more than offsetting cuts elsewhere, maintaining the net market oversupply.

"The majority of anticipated supply growth should complete this year, with lower growth rates expected in the coming years," he said. "Demand in key metal sectors, such as aerospace, continued to grow."

US tariffs

Another uncertainty is US tariffs.

In a November blog post, Cobalt Institute Head of Government and Public Affairs Mike Blakeney said no-one knew what to expect from another Donald Trump presidency and, although tariffs might not be as vast as threatened, they would come, especially for China.

"If we continue the logic from his September 2020 Executive Order, critical minerals could well be a focus of these tariffs," Blakeney wrote. "This might drive more investment into cobalt in the US in the longer term, but in the short term will drive up prices of both cobalt products, and the products they are made with."

He also predicted the worsening of the EU-US relationship.

"Any prospect of Europe and the US closely cooperating, or sharing mechanisms, on critical minerals supply, hard under Biden, is probably dead under Trump," he said.

Blakeley added that the green economy would not be a focus, with the Inflation Reduction Act's green incentives likely to be either diluted or repealed.

Crane said it was inevitable the US would impose tariffs.

"In the battery materials space, any tariff placed on imports will change economics and reroute supply chains," he said. "There are already tariffs on Chinese products and incentives to source alternatives, and those may be enhanced, which would benefit producers elsewhere."

As China dominates up to 90% of battery material trade, Crane said supply chains were likely to become squeezed and boost prices to compensate for added import costs, while producers in countries like Australia would directly benefit from this dynamic.