Cobalt prices soared following the Democratic Republic of Congo’s export ban, with ERG declaring force majeure on deliveries. Trading in China was temporarily halted as prices jumped nearly 12%. The Congo government aims to address oversupply, creating uncertainty in the market, with potential future quotas planned for cobalt exports.
Cobalt prices have seen a significant increase following supply concerns after the Eurasian Resources Group (ERG) announced force majeure on deliveries due to a Democratic Republic of Congo export ban on the metal. Trading was temporarily halted on the Wuxi Stainless Steel Exchange in China, where prices surged nearly 12% to 240 yuan per kg, marking the highest price since October. European prices also escalated, with standard grade cobalt in Rotterdam rising to $12.25 per lb, reporting increases from $10.80 on March 4 and $9.95 on February 24, according to Fastmarkets data.
The Congolese government’s recent suspension of cobalt exports for four months aims to manage oversupply and surplus issues that had previously driven prices down to nine-year lows of around $10 per lb, equivalent to $22,000 per metric ton. ERG’s declaration of force majeure indicates that unforeseen circumstances are hindering their ability to meet contractual obligations related to cobalt deliveries. ERG is among the larger cobalt producers, and their Metalkol operation in the DRC plays a crucial role in the global cobalt market.
The impact of ERG’s force majeure on the market has been substantial, with two European traders reporting that it has caused a noticeable increase in prices as awareness of the situation grows. Specifically, one trader noted the reluctance of Chinese sellers to release metal, emphasizing a shift in market dynamics due to the Congolese government’s firm stance.
Darton Commodities estimates that the Metalkol operation produced approximately 19,200 metric tons of hydroxide cobalt last year, representing about 9% of the DRC’s total cobalt production. Notably, Metalkol’s contributions can be linked to around 7% of global cobalt supply, further underscoring its significance in the industry. The Congo government is set to evaluate the export ban in three months, with the potential for modification or termination based on the outcomes of this review. Plans are also underway to introduce export quotas during the suspension period for cobalt exports, as affirmed by sources.
In conclusion, the recent surge in cobalt prices is a direct response to the Democratic Republic of Congo’s export ban and ERG’s declaration of force majeure. The trading landscape has shifted substantially, highlighting the importance of Congolese cobalt production in the global market. Future evaluations of the export ban and proposed quota negotiations will be crucial in shaping supply dynamics going forward.
Original Source: www.mining.com
