Cobalt Market Faces Price Stability Amid Oversupply Concerns

Cobalt market stability is projected for 2025 as oversupply persists. The shift towards new battery technologies like LFP dampens demand, potentially pressuring cobalt prices.

Date: 22-01-2025

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Market Overview and Price Stability
The cobalt market is characterized by an oversupply that has impacted prices since 2023. This trend is expected to continue into 2025, with limited price volatility due to the overwhelming supply. The rise of lithium iron phosphate (LFP) batteries in markets like China challenges the demand for cobalt.

Demand Growth and Geopolitical Risks
Despite an excess, the International Energy Agency (IEA) forecasts significant demand increases over the next two decades, anticipating a possible shortfall by 2035. This heightened demand is tempered by geopolitical risks, mainly due to the concentration of cobalt production in the Democratic Republic of Congo (DRC).

Changing Battery Chemistries
The shift towards LFP batteries becomes a potential threat to cobalt's market outlook, with a decline in demand for cobalt-based chemicals. Supply chain challenges are anticipated; thus producers may face pressure as they navigate these shifts.

Production Dynamics
Rapid production growth of cobalt in Indonesia and the interplay with copper and nickel markets may further exacerbate cobalt oversupply. Production from Indonesia offers a counterbalance to the DRC's dominance and bolsters the expected surplus of cobalt.

Additionally, ethical concerns surrounding the DRC's mining practices may incentivize shifts towards suppliers with cleaner reputations.

Regulatory and Trade Factors
Uncertainty surrounding political leadership in the U.S. may introduce further volatility, particularly with potential changes to EV legislation and tariffs on cobalt and EVs. Such regulatory shifts could significantly impact the supply-demand dynamics in the cobalt market.

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