[SMM Analysis] What Happened to the Market After the DRC Suspended Cobalt Exports? What Are the Future Expectations?

On February 24, 2025, the DRC, the world's largest cobalt supplier, announced a four-month suspension of cobalt exports to address the prolonged cobalt price slump caused by a supply surplus in the international market. The policy took effect on February 22 and is expected to be evaluated after three months to decide whether adjustments are needed. Upon its announcement, the policy garnered widespread global attention and ignited market enthusiasm for all cobalt-related products. According to SMM prices, as of March 14, prices of various cobalt products had risen significantly. Among them, the 10-day cumulative price increases for cobalt sulphate, cobalt chloride, and cobalt intermediate products all exceeded 80%. Why has this ban attracted such significant attention? First, from the perspective of cobalt resource reserves, data from the USGS shows that the DRC holds an absolute leading position in cobalt resource reserves, followed by Australia and Indonesia. From the perspective of overall resource output, in 2024, the DRC accounted for 73% of global cobalt resource output, maintaining its position as the world's largest producer. Indonesia, benefiting from cobalt resources associated with nickel ore, became the world's second-largest cobalt resource supplier, with a resource output share of 13%. However, there remains a significant gap compared to the DRC's output share. Therefore, the introduction of this ban has drawn widespread global attention. From the supply and demand perspective, has there been any change following the ban? According to previous SMM estimates, in 2025, the global total supply of cobalt resources is approximately 290,000 mt (metal content), while global demand is 250,000 mt (metal content), indicating that a global surplus is still expected. Among this, the DRC's output is approximately 180,000 mt (metal content). Since cobalt in the DRC is mostly associated with copper, driven by high copper prices in recent years, no significant changes in output are currently expected, with inventory buildup mostly occurring locally. Therefore, no significant adjustments to the annual global landscape are anticipated. However, due to the disruptions caused by the export ban on the supply chain, structural changes in supply and demand may occur in different regional markets. Focusing on the spot market, the ban is expected to cause certain changes in supply and demand expectations. Based on the aforementioned annual total output of 180,000 mt (metal content), the four-month ban is expected to impact the circulation of approximately 60,000 mt (metal content) of cobalt resources. If we focus solely on the four-month export ban, a short-term tight supply of cobalt raw materials is anticipated, which may boost short-term prices and drive inventory digestion across various channels in the spot market. However, medium and long-term impacts will depend on the implementation of subsequent policies. Additionally, the following key factors require attention: 1. Varying inventory buildup levels across different segments: According to SMM data, refined cobalt inventories, which have shown the best profit performance from 2023 to 2025, experienced significant inventory buildup over the past two years. In contrast, cobalt sulphate and Co3O4, which have shown weaker profit performance, mostly maintained slight destocking or tight balance trends. Differences in supply and demand structures among various cobalt products may lead to varying levels of price support. 2. Low proportion of long-term contracts: Due to the prolonged decline in cobalt prices, the proportion of long-term contracts related to cobalt products (e.g., long-term contracts for cobalt salts with cobalt resources, and for ternary cathode precursor plants with cobalt salts) remains relatively low. Under significant price fluctuations, a high proportion of spot orders will further amplify price volatility. 3. Structural supply-demand mismatch for cobalt raw materials: Leading integrated enterprises, through multiple channels such as MHP and recycling, have relatively sufficient raw material reserves. However, some second- and third-tier manufacturers and non-integrated enterprises still rely heavily on external purchases of raw materials. In this context, they are forced to accept high-priced raw materials, which will support cobalt product prices from the cost side. 4. Significant cobalt supply from Indonesian MHP: From the perspective of MHP production, according to SMM processing data, Indonesia's MHP production in 2024 was approximately 315,000 mt (Ni contained), with cobalt content of about 35,000 mt (metal content). Considering new project launches and capacity releases, Indonesia's MHP production in 2025 is expected to reach approximately 447,000 mt (Ni contained), with cobalt content of about 50,000 mt (metal content), providing some supplementation to resource supply. Market performance of cobalt-related products this week: 1. Cobalt intermediate products: Prices continued to rise this week. Producers generally adopted a strategy of withholding inventory and limiting sales, resulting in scarce market circulation. Downstream salt plants had low long-term contract coverage rates and rigid restocking demand, with active inquiries and purchases. Sporadic high-priced spot orders drove up spot prices. 2. Cobalt salts: Prices of cobalt salts rose significantly this week. Following the DRC's announcement of the cobalt export suspension, market sentiment continued to heat up, intensifying the reluctance of cobalt salt producers to sell. Spot quotations kept climbing, with increases approaching 80%. Many enterprises adopted strategies of small-volume, high-priced transactions, further pushing up spot prices for cobalt salts. 3. Refined cobalt: Refined cobalt prices continued to rise this week. On the supply side, refined cobalt supply remained relatively sufficient, with smelters generally adopting a strategy of withholding inventory and standing firm on quotes. On the demand side, downstream inquiries were active, with some follow-up transactions. Overseas traders were actively purchasing. At the market level, smelters maintained a strong reluctance to sell, coupled with some traders offloading inventory to delivery warehouses, leading to heightened speculative sentiment and continuously rising spot quotations. 4. Co3O4: Co3O4 prices rose significantly this week, with market willingness to hold prices continuing to strengthen. As smelters generally suspended quotations, inventory withholding and reluctance to sell became increasingly evident, resulting in a market with prices but no transactions. This prompted increased inquiries from LCO manufacturers, with numerous high-priced spot orders concluded, driving Co3O4 spot prices higher. Meanwhile, cobalt salt producers also intensified their reluctance to sell, further raising Co3O4 production costs. Under the dual pressures of tight supply and rising costs, Co3O4 spot prices have significant upward potential. SMM New Energy Research Team Cong Wang 021-51666838 Rui Ma 021-51595780 Disheng Feng 021-51666714 Ying Xu 021-51666707 Yanlin Lü 021-20707875 Yujun Liu 021-20707895 Xiaodan Yu 021-20707870 Zhicheng Zhou 021-51666711