The Democratic Republic of Congo, the world’s top cobalt producer, has extended its temporary export ban on cobalt for another three months. This ban is now effective until September 2025, following an initial four-month pause that began in February. The extension comes after cobalt prices plummeted to a nine-year low of about $10 per pound. As a result of this ban, cobalt prices have risen by 35%. The pause in exports is especially impacting companies like Glencore, and has led other regions, including Indonesia, to prepare for possible ongoing restrictions. These changes could alter market shares and affect global supply chains.

Market Supply Shift

The current scenario highlights a significant shift in market supply, driven mainly by policy changes in the Democratic Republic of Congo. With the cobalt export ban extended through the third quarter of next year, we are seeing changes in pricing. Initially, this was a reaction to long-term low prices, but it has evolved into a response that directly affects trading volumes and price volatility. Cobalt futures quickly reacted; the 35% price increase is not just recovery but also a re-evaluation of supply and future risks. Usually, slow physical market restrictions take time to reflect in derivatives, but that’s not happening here. Prolonged disruptions tend to alter assumptions about future pricing, and we are already seeing this recalibration, especially for the second half of 2025. These changes impact not just the current rates—there’s a growing sense of scarcity affecting shorter-term contracts. Market participants will have adjusted how they view the correlations between cobalt and related metals like nickel and lithium. Movements in those metals have been less drastic, suggesting that this reassessment is localized. However, there is potential for wider effects as substitution factors start to influence pricing models. The impact of reduced cobalt supply will also affect contract structures, particularly for instruments used for synthetic exposure by industrial hedgers.

Glencore And Indonesia

Looking at Glencore, the pause in Congolese exports has significantly reduced market flow. This creates an opportunity for smaller producers to fill the gap, although they may do so slowly. Since processing is concentrated in just a few areas, especially China, any drop in raw materials leads to delays that impact settled prices. We can no longer just depend on stated production capacity—timing is now more critical than volume. In Indonesia, we’ve noticed mining companies gearing up to increase output, likely in anticipation of future supply needs. If this trend continues, and if exports are made under competitive contracts, the differences in pricing between regions could tighten paper market spreads. Currently, these movements show less correlation, but they suggest a buffer capacity that we didn’t focus on earlier in the year. The tight supply situation should raise awareness about margin requirements, especially for short positions. Strategies that relied on earlier low prices now face risks from both price changes and access costs—financing availability and delivery obligations are now more sensitive to changes in contract pricing. We are increasing our near-term volatility estimates, especially around important inventory data releases and policy updates. Seasonal factors are less impactful now; policy and logistics play a much larger role. Create your live VT Markets account and start trading now.

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