Cobalt Supply Glut May Persist for Two Years, Glencore Warns

The global cobalt market is expected to experience an oversupply lasting up to two years, following an announcement from mining giant Glencore that it will halt stockpiling and release its cobalt hydroxide into the market, industry sources told Metalnomist. Glencore CEO Gary Nagle confirmed during the company’s recent second-quarter results that the cessation of stockpiling means cobalt from its Katanga and Mutanda operations in the Democratic Republic of Congo (DRC) will soon enter the market. The firm had been stockpiling since early 2023, but Nagle did not disclose the current stock levels.

"They are going to show more availability," one trader commented. "I don't think it's going to make a huge difference to anything; prices were going to come off further. Hydroxide prices could drift further down from where they are now."

In the first half of 2024, Glencore produced 15,900 metric tonnes of cobalt metal equivalent, a decrease of 5,800 tonnes from the same period in 2023. The company plans to increase production in the second half of the year.

"They'll see another 30,000 tonnes coming out of the African business," Glencore CFO Steve Kalmin noted. "That’s not just Katanga, it's also Mutanda as we look to increase throughput rates on both copper and cobalt in the second half."

Meanwhile, Glencore competitor China Molybdenum Co. (CMOC) produced 54,024 metric tonnes of cobalt metal equivalent from January to June, nearly tripling the 19,418 tonnes produced in the same period last year. This increase, driven by its Tenke Fungurume and newly developed Kisanfu mines in the DRC, has contributed to the ongoing supply glut that could persist for up to two years, according to Nagle.

As cobalt from Glencore and CMOC floods the market, prices across the cobalt complex are likely to continue their downward trend. Market participants believe that the high demand for copper, driven by electrification, will keep copper prices elevated, further contributing to the surplus of cobalt, which is often produced as a by-product.

"Copper is going to stay high for at least a few years," a trader told Metalnomist. "Some are predicting prices as high as $12,000 to $15,000 per tonne in the near term."

The continued oversupply of cobalt hydroxide, coupled with falling prices in the DRC, could result in further declines in cobalt metal prices. Metalnomist assessed European chemical grade metal prices at $11.90-$12.75 per pound yesterday, but lower prices are already being observed in the Chinese domestic market, with some traders reporting prices as low as $10.50 per pound.

"Single-figure metal is possible," one trader warned, "I don’t really want to see it."