Cobalt prices are expected to remain under pressure heading into 2025 as a surplus continues amid weak demand from the electric vehicle battery sector, analysts at Bank of America believe.
Prices of the metal have fallen throughout 2024, with the US cobalt spot price at approximately $24,300 per ton, down from $28,700 per ton in December of 2023.
Bank of America noted that demand for cobalt has lagged as EV manufacturers have increasingly shifted toward cobalt-free cathode chemistries.
“Remarkably, prices of chemicals used in EV batteries have underperformed cobalt metal, highlighting that miners have overdelivered on preventing constraints on electric vehicle production,” analysts wrote in a note to clients. “This mirrors the playbook in other battery metals, including nickel and lithium.”
Notably, China is leading the charge on cobalt-free lithium iron phosphate (LPF) batteries while investing in cobalt supply.
“In our view, fostering supply chain dominance may be one motive,” they wrote. “Under the current status quo, this may mean the bear market could continue for a while yet, even if world ex-China is now looking to make supply chains more resilient.”
To maintain dominance in the global cobalt market, China has made strategic investments in the Democratic Republic of Congo (DRC), including key acquisitions by major player China Molybdenum (CMOC).
“The DRC's cobalt exports increased by 260% year-over-year in December 2023, partly because a royalty dispute between CMOC and Gecamines was settled,” analysts wrote.
“While the export growth rates have come down, production continues to increase, with CMOC potentially accounting for 35% of global cobalt supply by 2030, from 10% in 2022.”
The DRC and Indonesia, however, are reassessing their reliance on Chinese investment due to geopolitical concerns and a desire for diversification, the analysts noted.