The global cobalt market is undergoing a severe downturn, marked by a dramatic decline in prices and an oversupply that has outpaced demand. This situation is primarily attributed to aggressive production increases by major players and evolving dynamics within the electric vehicle (EV) industry.
Surge in Production
China’s CMOC Group, a leading cobalt producer, has significantly amplified its output from its extensive copper-cobalt mines in the Democratic Republic of Congo (DRC). In 2024, CMOC’s production reached an astounding 114,165 metric tons, far exceeding initial projections of 60,000-70,000 tons. This surge has inundated the global market, contributing to a substantial oversupply.
Price Decline
The oversupply has precipitated a sharp decline in cobalt prices. As of February 2025, benchmark prices for standard-grade cobalt have fallen to $9.50 per pound, the lowest levels in a century when adjusted for inflation. This price drop reflects the market’s struggle to absorb the excess supply.
Shifts in EV Battery Composition
The demand landscape for cobalt is also shifting. The EV sector, once a robust driver of cobalt demand, is increasingly adopting lithium-iron-phosphate (LFP) battery chemistries that do not require cobalt. This transition is particularly pronounced in China, where LFP batteries accounted for two-thirds of all EV sales in 2024. The move towards cobalt-free batteries is reducing dependence on the metal, further exacerbating the supply-demand imbalance.
Industry Implications
The confluence of oversupply and diminishing demand has led to significant challenges within the industry. Companies like Glencore have ceased stockpiling cobalt, anticipating that the market surplus may persist for another 18 to 24 months. Additionally, the depressed market conditions have compelled some producers to halt operations and reconsider expansion plans.
Future Outlook
Analysts project that the cobalt market will remain in surplus through at least 2028. The sustained low prices and evolving battery technologies suggest a prolonged period of adjustment for the industry. Stakeholders may need to adapt to these new market realities, exploring alternative applications for cobalt and adjusting production strategies accordingly.
