Cobalt Prices Hit Eight-Year Low Amid Oversupply from DRC and Indonesia
The price of cobalt has reached its lowest level since January 2016, according to a daily assessment by Fastmarkets, a UK-based agency specializing in metal prices.
On September 24, 2024, cobalt prices on the London Metal Exchange had dropped by 54% since early September 2022, standing at $22,382 per tonne.
This significant price decline is attributed to an oversupply, primarily from the Democratic Republic of Congo (DRC) and Indonesia, the world’s top two producers of cobalt.
According to the Cobalt Institute, global demand for cobalt was projected to reach 197,000 tonnes in 2023, against a supply of 210,000 tonnes.
In 2024, production is expected to further surpass demand, with an estimated 245,000 tonnes of cobalt produced compared to a demand of 237,000 tonnes.
The DRC, the world’s leading cobalt producer, delivered around 140,000 tonnes from its mines in 2023 and is forecast to produce 110,000 tonnes in 2024, according to the Central Bank of Congo. This surplus contributes to the global oversupply, making the DRC particularly vulnerable to falling prices.
The International Monetary Fund (IMF) has warned that declining cobalt prices could negatively affect the DRC’s external financial position in 2024. Reduced export revenues could shrink the country’s foreign currency reserves, making it harder to finance imports.
In response to the ongoing market challenges, the DRC considered imposing export quotas earlier this year in an effort to boost prices. However, this option has not been implemented yet, and future price recovery will likely depend on a surge in global demand.
Despite the current market downturn, experts maintain a positive long-term outlook for cobalt. The global energy transition, along with rising production of electric vehicles, is expected to drive future demand for the metal.
