Cobalt Market Faces Oversupply Amid Growing Demand for EVs

Cobalt prices have fallen due to supply outpacing demand, but long-term projections show a potential demand shortfall by 2035. Investors should monitor trends affecting cobalt production and prices closely.

Date: 21-02-2025

AI Rating: 5

Market Overview: The cobalt market is currently facing challenges with oversupply, which has led to a significant decline in prices over the last two years. The report highlights that from July to September 2024, cobalt prices fell by 10%, with further declines expected in early 2025. This downward trend is primarily driven by supply growth outpacing near-term demand, influenced by factors such as shifting battery chemistries.

Production Insights: The Democratic Republic of Congo (DRC) remains the world's largest cobalt producer, accounting for approximately 84% of global production in 2024. However, concerns regarding human rights abuses in the artisanal mining industry in the DRC could lead to increased caution among investors regarding companies operating in this region.

Long-Term Demand: While there are immediate pressures on cobalt prices due to oversupply, long-term projections from the International Energy Agency suggest a significant rise in demand from 213,000 metric tons in 2023 to 454,000 metric tons by 2040. This indicates that despite current price pressures, there may be a robust market for cobalt in the future.

Growth Opportunities: Indonesia has emerged as a notable producer, with cobalt production increasing by 937% since 2021, though environmental concerns regarding its operations could affect future investor sentiment. Overall, while the current market dynamics for cobalt may appear negative, investors should focus on the projected demand increases in the long run.

Stocks: CMCLF GLCNF VALE