The oversupply of cobalt in the global market is causing concern among industry analysts, with prices expected to remain depressed through the second quarter of 2024 and possibly beyond. The primary drivers of this oversupply situation are the surge in Chinese cobalt metal production and subdued demand.
China, the world’s largest producer of cobalt, is set to bring an additional 9,000 metric tons of new cobalt metal capacity online in the coming months. This increase in production is expected to contribute to a 319% jump in Chinese refined cobalt output by 2024, saturating the market with excess supply.
Analysts at S&P Global Commodity Insights predict that the global cobalt metal market will remain oversupplied until at least 2026, leading to downward pressure on prices. Some cobalt sulfate refiners have even shifted their focus to producing cobalt metal in search of higher profit margins.
Despite the bleak outlook for cobalt prices, there are some positive developments in the market. The demand for cobalt sulfate, particularly from nickel-manganese-cobalt batteries used in electric vehicles, is projected to increase significantly. Additionally, tight availability of alloy-grade cobalt and rising shipping costs due to geopolitical tensions could provide some support for prices in the near term.
While cobalt hydroxide prices hit a record low in late 2023, there has been a modest rebound in the first quarter of 2024. However, prices still remain 22% lower than the previous year.
Overall, the cobalt market is facing challenging times ahead as oversupply continues to weigh on prices, but there are pockets of opportunity for growth, particularly in the electric vehicle sector. Investors and industry stakeholders will need to closely monitor market developments to navigate these turbulent waters.
