Market diagnosis: The global cobalt market remains in structural deficit driven by the DRC export quota system — 87,000-96,600 mt/yr, less than half of 2024 peak output. LME CFD settled at $56,290/mt with Fastmarkets projecting a ~10,700 tonne deficit for 2026. The quota framework is reinforced by administrative delays limiting actual shipments to roughly one-third of allocations, and the June 30 forfeiture deadline for unused H1 2026 quotas has now passed — tightening effective supply for H2 2026. No demand-crushing catalyst is on the near-term horizon, and the DRC has signalled the policy is permanent through at least end-2027.
The deficit is structural, not cyclical — driven by sovereign supply controls. Chinese smelters face feedstock gaps. Non-DRC supply (Indonesia, Australia) is too small to close the gap within 3 years. A July 5 customs platform glitch added further friction to quota utilisation. The buyer position is DEFENSIVE: maintain term coverage at current levels. The asymmetric risk is to the upside if the DRC tightens enforcement or further administrative bottlenecks compound in H2 2026.