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| Cobalt |
Market Shock as ERG Declares Force Majeure
Cobalt prices surged as supply fears intensified following Eurasian Resources Group’s (ERG) declaration of force majeure due to the Democratic Republic of Congo's (DRC) cobalt export ban. The ban, aimed at curbing oversupply, led to cobalt trading halts in China and price spikes in Europe.
Price Spikes and Market Reactions
Cobalt on China’s Wuxi Stainless Steel Exchange jumped nearly 12% to 240 yuan/kg, its highest level since October. European standard-grade cobalt prices in Rotterdam rose to $12.25 per lb on March 7, up from $10.80 on March 4 and $9.95 on February 24, according to Fastmarkets data. The DRC's four-month export suspension follows a sharp price decline to nine-year lows of $10 per lb due to surplus stockpiles.
ERG, the third-largest cobalt producer in the DRC, invoked force majeure at its Metalkol operation, which accounts for 9% of the DRC's cobalt output and 7% of the global total. This move has alarmed traders, with some noting that Chinese sellers are withholding metal in response to the disruption.
Future Implications and Policy Adjustments
The Congolese government will review the export ban in three months and may modify or lift it based on market conditions. Future cobalt export quotas are also under discussion. Major producers impacted by the suspension include Glencore and China’s CMOC Group.
