Cobalt prices increased sharply due to supply concerns after ERG declared force majeure following Congo’s export ban on cobalt. Trading was halted at China’s Wuxi Stainless Steel Exchange as prices rose nearly 12%. European prices also climbed, reflecting a broader trend of concerns over cobalt supply amidst regulatory changes in Congo.
Cobalt prices surged notably on Monday amid concerns regarding supply disruptions after the Eurasian Resources Group (ERG) declared force majeure on deliveries in response to a Democratic Republic of Congo export ban. At the Wuxi Stainless Steel Exchange in China, trading was halted when prices increased nearly 12%, reaching approximately 240 yuan per kg, a peak not seen since October.
Furthermore, European cobalt prices also experienced an upward trend, with standard grade cobalt stored in Rotterdam climbing to $12.25 per lb on March 7, increasing from $10.80 on March 4 and $9.95 on February 24, according to Fastmarkets. The Congo government’s decision to suspend cobalt exports for four months aims to mitigate oversupply issues that had previously driven prices down to nine-year lows around $10 per lb, equivalent to $22,000 per metric ton.
The declaration of force majeure by ERG, which is the third-largest cobalt producer in the Democratic Republic of Congo, indicates that unforeseen circumstances are obstructing the company’s contractual obligations regarding deliveries. Several sources reported that ERG’s Metalkol operation, which contributed significantly to the cobalt output in the country, is at the center of these supply concerns.
According to Darton Commodities, ERG’s Metalkol produced about 19,200 metric tons of cobalt hydroxide last year, which represented roughly 9% of the total production in Congo. The government plans to review the cobalt export ban in three months, with possibilities for adjustments or termination based on progress. Additionally, future export quotas for cobalt are anticipated to be set during this suspension.
Major players in the Congo cobalt market also include Glencore and China’s CMOC Group, both of which contribute to the overall production outcomes in the region.
In conclusion, the recent surge in cobalt prices can be attributed to supply threats following the Democratic Republic of Congo’s ban on cobalt exports. This measure has prompted ERG to declare force majeure, considerably impacting market dynamics and leading to increased commodity prices both in China and Europe. As the situation evolves, future actions may include the introduction of export quotas aimed at regulating production and stabilizing prices.
Original Source: www.mining.com
