The recent surge in cobalt prices
According to the Commodity Cobalt Market Analysis System of Shengyi Society, the cobalt price on February 28th was 176100 yuan/ton, a significant increase of 9.93% compared to the cobalt price of 160200 yuan/ton on February 21st. Recently, the government of the Democratic Republic of Congo announced that it will ban all cobalt exports for the next four months, and plans to introduce a cobalt export quota system. This has led to a tight supply in the cobalt market and a significant increase in cobalt prices.
Congo suspends cobalt exports for 4 months
The Strategic Mineral Market Supervision and Control Authority of the Democratic Republic of Congo issued a statement on the same day, stating that the Prime Minister and Minister of Mines of Congo signed a decree to suspend cobalt exports for four months in response to the global cobalt market oversupply situation. This measure will come into effect on February 22nd. The statement stated that an evaluation will be conducted in three months, and the suspension measures may be adjusted or lifted according to the situation.
Congo plans to introduce cobalt export quota system
Faced with the dual pressure of slowing demand from automobile manufacturers and mining companies increasing cobalt production to boost copper production, cobalt prices have fallen to historic lows. The government of the Democratic Republic of Congo has begun to consider a more long-term solution – introducing a cobalt export quota system. The government of the Democratic Republic of Congo plans to negotiate with relevant stakeholders during the upcoming export suspension period to reach a consensus on the specific details of the quota system. This includes key elements such as determining the total amount of quotas, allocation methods, and regulatory mechanisms.
Overview and Prospect
According to data analysts from Shengyi Society, the government of the Democratic Republic of Congo has previously announced a ban on all cobalt exports for the next four months, and this temporary ban may not be sufficient to effectively restrict the flow of cobalt metal in the market. Due to many companies having already reserved a large amount of inventory in advance, it is expected that these inventories will be released into the market after the ban is implemented, further lowering cobalt prices. The temporary ban may have a relatively limited boost to cobalt prices and may not have a lasting impact.
On February 9, 2024, the President of the Democratic Republic of Congo called on the government to take emergency measures to better regulate cobalt sales and increase cobalt mining revenue, assess the necessity of implementing export quotas or taking other measures to ensure the price profit of cobalt in the Democratic Republic of Congo. Recently, the export quota system has been reintroduced, and the process is full of challenges. The government of the Democratic Republic of Congo needs to negotiate with relevant stakeholders because their interests and demands are different, and it is necessary to balance the supply and demand relationship of domestic and foreign markets. The introduction of an export quota system by the government of the Democratic Republic of Congo is facing many difficulties.
Overall, the government of the Democratic Republic of Congo is optimistic about the introduction of cobalt export quota system, but the international market does not take it seriously. The government of the Democratic Republic of Congo has banned the export of cobalt products, which has provided significant support for the rise in cobalt prices. However, the implementation of the cobalt export quota system is difficult, and the quota system may not be able to change the situation of oversupply. In the short term, the sustained rise in cobalt prices is not supported. In the medium to long term, the strength of the government’s ban on cobalt product exports determines the trend of cobalt prices.
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