Cobalt has become one of the most volatile commodities in the battery metals complex, with prices more than doubling since early 2025 after the Democratic Republic of Congo implemented a decisive export control regime. LME cobalt benchmarks are trading above US$52,000/t in July 2026, levels not sustained since mid-2022. The trigger was a single policy decision in February 2025: the DRC halted exports, then transitioned to a quota system capping annual exports at 87,000 tonnes for 2026 and 2027, with an additional 9,600t/year allocated to a strategic domestic stockpile.
The result is a market paradox: more cobalt is being mined than ever, but it is being stockpiled inside the DRC rather than reaching global consumers. The DRC produces approximately 73% of the world's mined cobalt, and Chinese refineries process roughly 78% of refined output. With DRC hydroxide exports constrained, Chinese refineries face a feedstock shortage that has driven North East Asia spot prices from US$24.11/kg in Q1 2025 to US$67.42/kg in Q1 2026 — a 180% surge in twelve months.
Fastmarkets projects the global cobalt market will run a structural deficit of approximately 10,700 tonnes in 2026 against demand of around 292,300 tonnes. The shortfall is driven by quota-limited feedstock and ongoing stock drawdowns. 'This increase in supply will not be sufficient to offset the drop in supply from the DRC, leaving the market in deficit in 2026,' a Fastmarkets analyst noted, referring to the expected growth in non-DRC supply.
Indonesian mixed hydroxide precipitate (MHP) is emerging as the most significant non-DRC alternative. Fastmarkets expects MHP supply to rise by approximately 21,200 tonnes of contained cobalt in 2026, with an additional 3,000 tonnes of domestic refined supply. But this is not enough to rebalance the market. Chinese refineries, starved of DRC hydroxide, are increasingly bidding for Indonesian MHP and recycled black mass, intensifying competition and supporting higher refined cobalt prices.
The demand side remains resilient despite ongoing cathode chemistry shifts. IMARC projects global cobalt demand rising from 241,000 tonnes in 2025 to 298,000 tonnes by 2034, a CAGR of 2.35%. Electric vehicle deployment and battery manufacturing capacity expansion are the central growth drivers. Aerospace, medical, and defense sectors provide additional alloy-grade demand, with US stockpiling supporting overall market sentiment.
PricePedia's survey of Consensus Economics forecasts cobalt mattes prices rising from US$30,000/t in 2025 to US$34,000/t in 2026 and US$35,000/t in 2027, implying structurally higher levels than the pre-2025 glut. But the trajectory is tied entirely to DRC policy decisions and their enforcement. Any relaxation of quotas would quickly flood the market; any tightening would push prices higher.
Artisanal mining remains a persistent ESG risk for supply chains. The DRC's artisanal sector is associated with child labor and unsafe working conditions, creating reputational risk for EV OEMs and battery manufacturers. This is driving demand for certified industrial DRC supply and for non-DRC alternatives. The market is increasingly bifurcated between DRC hydroxide (scarce, quota-constrained, higher-priced) and non-DRC intermediates (growing but insufficient to close the deficit).
Procurement teams exposed to cobalt should assume the deficit persists through 2027. The DRC quota system is embedded policy, not a temporary measure, and the 9,600t strategic stockpile signals the government's willingness to accept reduced export volumes to capture downstream value. For battery-grade cobalt, structure multi-year contracts with DRC hydroxide-linked formulas but include force majeure clauses covering export policy changes. Build optionality into contracts: 50% DRC hydroxide, 25% Indonesian MHP, 25% recycled content if available. Track the spread between DRC hydroxide and Indonesian MHP prices — a widening spread signals the market has not found equilibrium. For non-battery applications (aerospace, tooling), consider stockpiling 3-6 months of forward requirements given that alloy-grade cobalt has fewer substitution options. The key risk to watch: the backlog of Q4 2025 hydroxide quota volumes that DRC permitted to roll over into 2026. If those volumes are released in a concentrated period, expect a temporary price correction. Plan purchases around that window.