Prices of cobalt hydroxide, a key component in electric vehicle batteries, have plummeted due to a surge in supplies from the Democratic Republic of Congo. According to Benchmark Mineral Intelligence (BMI), payables for cobalt hydroxide have dropped to 46% of the cobalt metal price, compared to around 90% in late 2021.
BMI analyst Roman Aubry predicts a surplus of 17,000 tons of cobalt this year, with demand expected to surpass supply in 2027. Production from Indonesia, where cobalt is a byproduct of nickel, is also contributing to the surplus.
Cobalt supplies from Indonesia are set to more than double this year, while those from the DRC will rise by over 14%. The resumption of cobalt and copper shipments from Tenke Fungurume mine in the DRC has boosted supplies.
Despite growing demand, particularly from the electric vehicle industry, the switch to cheaper lithium iron phosphate batteries and a reduction in cobalt content in batteries are posing long-term challenges to cobalt demand.
Analysts at Morgan Stanley expect cobalt prices to remain under pressure, with market surpluses forecasted to increase in the coming years.
Overall, the cobalt market is facing a period of oversupply, leading to a sharp decline in prices. Manufacturers and investors will need to navigate this challenging landscape as the industry continues to evolve.
