Cobalt prices soared due to supply fears after the Democratic Republic of Congo imposed an export ban, leading ERG to declare force majeure on deliveries. Prices increased significantly on exchanges in China and Europe. The Congo government’s four-month ban aims to address oversupply concerns, with additional developments anticipated in three months as export quotas are considered.
Cobalt prices experienced a significant increase on Monday, primarily due to supply concerns stemming from a recent export ban imposed by the Democratic Republic of Congo. The Eurasian Resources Group (ERG) declared force majeure on cobalt deliveries, further exacerbating supply fears. Prices on China’s Wuxi Stainless Steel Exchange surged nearly 12%, reaching approximately 240 yuan per kg, which marks the highest level since October.
In Europe, cobalt prices also witnessed a notable rise, with the standard grade cobalt stored in Rotterdam climbing to $12.25 per pound as of March 7, up from $10.80 on March 4 and $9.95 on February 24, according to Fastmarkets. This price spike follows Congo’s government decision to halt cobalt exports for four months due to oversupply and significant surpluses, which previously caused prices to fall to nine-year lows, around $10 per pound or $22,000 per metric ton.
The declaration of force majeure by ERG, the third-largest producer of cobalt in the DRC, was reportedly triggered by the export ban, impacting its Metalkol operation. Notably, two European traders noted that the move by ERG prompted a sharp rise in cobalt prices. One trader remarked, “The Chinese are not (selling) metal. There is a growing realisation that Congo means business.”
Darton Commodities estimates that ERG’s Metalkol operation produced approximately 19,200 metric tons of cobalt in hydroxide last year, representing about 9% of Congo’s total output and 7% of global production, which exceeded 280,000 tons. The Congo government’s export ban will be subject to review in three months, with potential modifications or terminations based on the review’s outcome. Sources indicate that the government intends to establish cobalt export quotas during this suspension phase. Other major cobalt producers in Congo include Glencore and CMOC Group.
The surge in cobalt prices is a direct result of supply concerns following the Democratic Republic of Congo’s export ban. The declaration of force majeure by ERG has heightened the market’s apprehension, leading to significant price increases both in China and Europe. As the situation evolves, the Congo government’s upcoming review of the export ban may further influence supply dynamics and price stability.
Original Source: www.mining.com
