Congo’s Cobalt Export Ban Boosts Chinese Stocks Amid Supply Concerns
Cobalt stocks surged in China on Tuesday following an unexpected export ban in the Democratic Republic of Congo (DRC), improving the short-term outlook for the key material used in alloys and batteries.
Shares of Nanjing Hanrui Cobalt Co. soared by as much as 17% in Shenzhen, while Zhejiang Huayou Cobalt Co. gained 7.8%. In contrast, CMOC Group Ltd., which has been expanding operations at its two massive mines in the DRC, slipped 2% in Hong Kong.
The DRC, the world’s leading cobalt producer, announced a four-month suspension of cobalt exports to address global oversupply.
The government also stated that additional measures would be introduced to stabilize the market. This decision has sent ripples through the industry, as the DRC accounts for approximately 75% of global cobalt production.
The export ban “could reduce the projected oversupply this year, though the impact will depend on whether producers cut output or increase stockpiles,” consultancy Benchmark Mineral Intelligence noted.
Cobalt production in the DRC has risen in recent years, largely due to CMOC’s expansion, but this has also contributed to falling prices.
The benchmark metal has dropped below $10 per pound, a level not seen in 21 years except for a brief decline in late 2015, according to Fastmarkets data. Cobalt hydroxide, the primary form of the metal produced in the DRC, has fallen below $6 per pound.
The ban could benefit Indonesia, the world’s second-largest cobalt producer, which has been expanding its market share through Chinese investment.
Congo’s export restrictions may remove about 20,000 tons of cobalt from global supply, but existing inventories should offset the shortfall, said Xu Aidong, an analyst with Beijing Antaike Information Co., at a Fastmarkets conference in Shanghai.
