Cobalt prices rose sharply following the DRC’s export ban and ERG’s force majeure declaration impacting deliveries. Trading was disrupted in China, and European prices significantly increased. The ban aims to address previous oversupply issues, with a review planned in three months regarding future export strategies.
Cobalt prices surged on Monday due to supply concerns triggered by the Democratic Republic of Congo’s (DRC) ban on exports, leading Eurasian Resources Group (ERG) to declare force majeure on deliveries. On China’s Wuxi Stainless Steel Exchange, cobalt trading was halted after prices escalated nearly 12% to approximately 240 yuan per kg, marking the highest level since October. European cobalt prices reflected this trend, with standard grade cobalt in Rotterdam increasing from $10.80 per lb on March 4 to $12.25 per lb on March 7, according to Fastmarkets data.
The DRC government recently imposed a four-month suspension on cobalt exports to address oversupply issues that pushed prices to nine-year lows. ERG, the third-largest cobalt producer in the DRC, cited the export ban as the reason for its force majeure declaration for deliveries from its Metalkol operation, impacting its contractual obligations. As the leading cobalt producer globally, Congo’s actions significantly influence market dynamics.
Two European cobalt traders indicated that the ERG’s situation led to the price increase, highlighting that with Congo’s firm stance on exports, traders were adapting their strategies. One anonymous trader noted that the Chinese market was refraining from selling metal, hinting at a shift in market behavior due to Congo’s firm actions. ERG’s Metalkol operation produced approximately 19,200 metric tons of cobalt last year, accounting for around 9% of Congo’s total production.
The DRC’s export ban is set to be reassessed in three months, potentially leading to export quotas as part of the government’s strategic regulatory adjustments. Other major cobalt producers in the DRC, such as Glencore and CMOC Group, will also be affected by these new measures, adding to the market’s volatility.
The recent surge in cobalt prices can be attributed to the DRC’s export ban aimed at controlling oversupply. The declaration of force majeure by ERG has further intensified market fears regarding cobalt availability, impacting both Chinese and European markets. As the DRC will review the ban in three months, its future implications for the cobalt market could include new export quotas and a potential stabilization of prices as producers adapt to the regulatory environment.
Original Source: www.mining.com
