CITIC SEC: Congo (kinshasa) suspends cobalt exports, and cobalt prices are expected to stabilize and rebound.

CITIC SEC released a research report stating that the government of the Democratic Republic of Congo (DRC) announced on February 24th a decision to suspend cobalt exports for four months. In 2024, the country's cobalt production accounted for 76% of the global total. If this policy is strictly enforced in 2025, the bank estimates that it may affect the DRC's cobalt export volume of 70,000 tons in 2025, potentially leading to a global cobalt market supply shortage in the short term, resulting in a stabilizing and rebounding cobalt price. Chinese enterprises have invested significantly in nickel and cobalt wet metallurgy capacity in Indonesia. The bank predicts that if cobalt prices rise, it will significantly benefit related companies, as well as domestic cobalt manufacturers who have stockpiled inventory. The main points of CITIC SEC's report are as follows: The DRC's cobalt production accounts for 76% of the global total, and an export ban policy will severely impact global cobalt supply. According to USGS data, the DRC produced 220,000 tons of cobalt in 2024, while global cobalt production was 290,000 tons. Mysteel data from the DRC's central bank shows that cobalt shipments reached 184,000 tons from January to November 2024, with Mysteel estimating a full-year shipment of 200,000 tons, a year-on-year increase of 44%. The bank calculates that if the country's cobalt export ban is strictly enforced, it may affect nearly 70,000 tons of cobalt exports from the DRC, significantly impacting the global cobalt market. The cobalt market may shift from oversupply to shortage, with cobalt prices expected to stabilize and rebound. According to Wind, the MB cobalt price (standard grade) has dropped below $10 per pound, with electrolytic cobalt falling to 160,000 RMB per ton, a decrease of about 75% from the peak in 2022. Cobalt is mostly found in copper-cobalt and nickel-cobalt ores. The increase in copper prices and nickel production capacity has led to a significant increase in cobalt production, while downstream demand growth in consumer electronics and other industries has been limited, resulting in a significant oversupply in the cobalt market and a long-term decline in prices. The International Cobalt Industry Association predicts that the global cobalt oversupply in 2024 is expected to be around 50,000 tons, with the bank forecasting this oversupply to continue in 2025. If the DRC's cobalt export ban is strictly enforced, the global cobalt market may shift to a shortage in the short term, with cobalt prices expected to stabilize and rebound. If cobalt prices rebound, Indonesian cobalt producers are expected to benefit, as well as cobalt manufacturers with inventory. Indonesia is the second-largest cobalt-producing country, with nickel-cobalt ores. Chinese enterprises have invested heavily in nickel wet metallurgy capacity in Indonesia, producing nickel hydroxide and cobalt hydroxide products. Additionally, due to the long transportation period between the main cobalt production site in the DRC and the major consumer market in China, domestic cobalt industry companies generally hold a certain amount of cobalt raw material inventory. If cobalt prices rebound significantly in the short term, the bank predicts that domestic cobalt industry listed companies are likely to benefit from the increase in inventory value. In 2024, CMOC Group Limited's cobalt production in the DRC was 110,000 tons, while Zhejiang Huayou Cobalt, Ganzhou Teng Yuan Cobalt New Material, Shengtun Mining, and Nanjing Hanrui Cobalt produced 40,000/16,000/12,000/8,000 tons of cobalt in the DRC in 2023, respectively. Risk factors include: the enforcement of the DRC's cobalt export ban policy falling short of expectations, cobalt industry inventory exceeding expectations, overseas cobalt supply growth exceeding expectations, and consumer electronics and ternary power battery demand falling short of expectations.