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 H1 2026 forfeiture deadline passed on June 30, and a July 5 customs platform glitch further disrupted Q2 quota utilisation. No demand-crushing catalyst is on the near-term horizon. 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. 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 following the H1 forfeiture deadline.