At the beginning of 2026, the global critical metals market entered a new cycle of volatility driven by resource nationalism and strategic competition among major powers. The core conflict is shifting from pure market supply and demand to direct competition for control over mineral resources and dominance in supply chains. Cobalt, as a strategic metal in the new energy and high-end manufacturing sectors, is experiencing particularly profound market changes.
I. Supply Side: Resource Control and Alliance Games Reshape Global Circulation
Structural tightening and targeted control on the supply side constitute the primary constraints for the cobalt market in 2026.
1. Resource National Policies: Tightening from Both "Volume" and "Price" Ends
Major resource-producing countries are strengthening resource sovereignty through more direct means. The DRC officially implemented export quota management for cobalt, setting the total quota for 2026-2027 at 96,000 mt, controlling the release pace of global core supply from the source. Indonesia, by reducing its nickel ore production target (2026 target approximately 250 million mt, down 34% from 2025) and planning to classify cobalt as an independent mineral subject to royalty fees, is exerting influence from cost and byproduct supply perspectives.
2. Geopolitical Games: Western Alliances Building a "Resource Closed Loop"
Two key actions led by the US are attempting to systematically reshape the global flow of cobalt resources:
- On February 3, Glencore announced its intention to transfer a 40% strategic equity stake in its core assets, the Mumi and KCC projects in the DRC, to the US-supported "Orion Critical Minerals Coalition" (Orion CMC). While the transaction retains operational rights, the coalition gains key product sales direction rights.
- On February 4, the US convened the first "Critical Minerals Ministerial Meeting," promoting the establishment of a "Critical Minerals Club" involving about 30 countries. This aims to create an exclusive resource circulation system within the alliance through mechanisms such as tariff-free trade and setting price floors.
3. Supply to China: Evolving from "Procurement Challenges" to a "Structural Crisis"
Against this backdrop, China's cobalt raw material supply faces unprecedented structural challenges. Estimates indicate:
- The quota corresponding to Chinese enterprises' own share is 48,720 mt, accounting for only 50.43% of the total quota.
- Approximately 60% (6,800 mt) of Glencore's own share is expected to flow to China based on historical cooperation.
- The proportion of shares from companies like the Eurasian Resources Group and EGC that are handled by traders such as Mercuria ultimately flowing to the Chinese market is highly uncertain, representing the largest risk exposure in the supply chain.
II. Demand Side: Differentiation and Resilience Under Cost Pressure and Technological Evolution
While the demand side is impacted by weakness in the end-user electronics market, it also demonstrates structural resilience driven by technological advancements.
1. End-user market under pressure, shipment expectations generally lowered
Affected by the soaring prices of key components such as memory chips, global demand for consumer electronics in 2026 is suppressed:
- Smartphones: Global shipment growth expectations are revised down by 7.48%, with a significant impact on the domestic Android segment.
- PCs and tablets: Manufacturers plan to raise prices by at least 10% to pass on costs, which is expected to result in a decline in shipments of about 10%.
2. LCO demand: Technological upgrades offset weak sales
Despite the pessimistic outlook for end-user shipments, the continuous improvement in battery energy density remains a key support. It is expected that the single-unit power capacity of 3C products will maintain an annual growth rate of over 10% before 2028. This factor effectively cushions the impact of declining sales, maintaining core demand for LCO materials. Based on this, the 2026 projections are:
- Global LCO cathode material production schedule: 126,500 mt Corresponding refined cobalt demand: 75,800 mt in metal content
- China's LCO cathode material production schedule: 113,500 mt Corresponding refined cobalt demand: 68,000 mt in metal content
III. Core contradiction in 2026: Shortage is inevitable, industrial ecosystem faces restructuring
Considering both supply and demand, the key feature of the 2026 cobalt market will be the intense clash between "politicized supply" and "technologized demand."
1. Supply-demand gap for intermediate products becomes evident
On the demand side, the rigid demand for intermediate products from LCO and other sectors (such as cobalt hydroxide additives, magnetic materials, etc.) is approximately 51,000 mt in metal content. On the supply side, the total amount of intermediate products confirmed to flow into China is about 55,500 mt in metal content, but it is estimated that around 25,000 mt in metal content will be prioritized for use in ternary batteries and other areas. This means that only about 30,000 mt in metal content of intermediate products will be available to meet the domestic demand for LCO and other markets, indicating a clear supply gap.
2. Market liquidity and pricing power shift
In 2026, China's own quotas will mainly be used for internal supply, making it difficult for them to enter the open market. This means that the spot market's circulating goods will heavily rely on shares from overseas suppliers like Glencore and Eurasian Resources. This change will significantly strengthen the pricing influence of foreign traders in the domestic spot market, intensifying price volatility.
3. Long-term industrial impact: Extreme competition spurs technological revolution and decentralization of the supply chain
The current resource scramble may be depleting the future of traditional supply chain models:
- Accelerated industrialization of recycling: Supply instability and high prices will act as the strongest catalysts, driving recycling from an "environmental protection supporting role" to a "pillar of supply chain security." Technological breakthroughs and large-scale applications will develop beyond expectations.
- Material Technology Route Iteration: Persistently high cobalt prices will substantially drive the low-cobalt/decobaltization process. The penetration of LCO-ternary composite materials in the low and mid-end segments will accelerate significantly, reducing reliance on primary cobalt from the source of demand.
Conclusion
The cobalt market in 2026 is not merely an issue of economic cycles. It is a race between a geopolitically orchestrated supply chain fragmentation and a technology substitution and recycling revolution driven by market economy principles. In the short term, resource controllers have gained the upper hand through administrative and alliance measures, intensifying market tension and volatility. However, in the long run, such extreme control behaviors are likely accelerating the cultivation of a new-type industrial ecosystem that is unfavorable to them—one that is flatter, more efficient, and reliant on technological innovation.
