Cobalt has become one of the most volatile and strategically fraught commodities of the mid-2020s. After touching nine-year lows near $24,340 per tonne in early 2025, LME cobalt metal has surged to approximately $56,290/t as of late May 2026 — a rally of more than 130% driven almost entirely by sovereign intervention in the Democratic Republic of Congo, the source of roughly three-quarters of the world's mined cobalt.
The numbers are arresting. On September 21, 2025, the DRC replaced a months-long export ban on cobalt hydroxide with a formal quota system administered by ARECOMS, the country's mining supply chain regulatory authority. Annual exports were capped at 96,600 tonnes for both 2026 and 2027 — less than half of the DRC's 2024 production of approximately 211,000 tonnes. After ARECOMS carves out a 10% strategic reserve for projects of national importance, the allocable quota available to licensed producers shrinks further to roughly 86,940 tonnes per year.
The largest allocations went to the DRC's biggest producers. China's CMOC Group and Glencore received the dominant shares. Glencore's combined 2026 allocation of 22,800 tonnes represents approximately 23.6% of the total national cap, while its 2027 allocation of 18,800 tonnes reflects a 17.5% reduction — a signal that the cap itself may tighten further. CMOC, which received a Q4 2025 quota of just 6,650 tonnes, reported that first shipments under the new system were unlikely to depart before January 2026.
The feedstock shock rippled through global supply chains with remarkable speed. Cobalt hydroxide prices — the primary battery feedstock exported from the DRC to Chinese refiners — soared 263% from Q4 2024 to Q4 2025, jumping from $4,012 per tonne to $14,560 per tonne. With intermediate products scarce, Chinese buyers turned to domestic exchange inventories, withdrawing more than 3,250 tonnes of cobalt metal from the Wuxi Stainless Steel Exchange by the end of January 2026 — representing 37% of the exchange's total registered inventory.
Fastmarkets projects a global cobalt market deficit of 10,700 tonnes in 2026 against total demand of 292,300 tonnes. This deficit persists despite aggressive growth in Indonesian mixed hydroxide precipitate (MHP) output, which is forecast to climb 39% from 38,324 tonnes in 2025 to 53,318 tonnes in 2026. "This increase in supply will not be sufficient to offset the drop in supply from the DRC, leaving the market in deficit in 2026," said Fastmarkets analyst Jake Masson. The imbalance is compounded by the fact that China controls approximately 70% of global cobalt refining capacity, creating a bottleneck where DRC feedstock shortages translate almost immediately into refined product scarcity worldwide.
The demand side of the equation adds further upward pressure. EV batteries remain the dominant end-use, accounting for roughly 70% of global cobalt consumption via NMC (nickel-manganese-cobalt) and NCA (nickel-cobalt-aluminium) cathode chemistries. While lithium iron phosphate (LFP) batteries surpassed nickel-based chemistries in global EV deployments for the first time in 2025 — taking more than 50% of installed capacity — this shift is heavily concentrated in China, where more than 80% of EVs sold use LFP. In Europe and North America, 80–90% of EVs sold still rely on cobalt-containing cathodes, with all top-10 best-selling BEV models in both regions using NMC or NCA formulations.
Consumer electronics provide another resilient demand pillar. Lithium cobalt oxide (LCO) battery production rose an estimated 25% year-on-year in 2025, consuming an additional 16,000 tonnes of cobalt as smartphones, laptops, and AI-capable devices demand ever-higher energy density in compact form factors. Aerospace and defense applications — where cobalt-based superalloys remain irreplaceable for high-temperature turbine components — add a non-substitutable floor to demand that chemistry shifts cannot erode.
Macquarie Group captured the market's precarious geometry bluntly in late 2025: "If this quota is adhered to, there is no question that the market would run out of material before the middle of 2026, suggesting prices could potentially rise higher than in the previous bull market rally in 2022." The 2022 peak saw cobalt above $80,000/t. With the deficit entrenched, DRC export rules providing "no certainty" (as Panmure Liberum analyst Duncan Hay put it), and US strategic stockpile initiatives adding government-backed demand, that record may come into view.
Several wildcards bear watching. Indonesia's MHP ramp could ease the deficit if HPAL plants scale faster than forecast. Recycling flows from black mass processing are growing but remain marginal relative to primary demand. And the DRC's quota system itself is not immutable — ARECOMS extended Q4 2025 quotas through March 31, 2026, suggesting administrative flexibility that could either tighten or loosen the tap. But for now, the directional signal is unambiguous: the cobalt market is structurally undersupplied, and procurement teams that assumed the 2022–2024 bear market was the new normal are paying the price.
Procurement teams should prepare for sustained cobalt tightness through at least H2 2026. The DRC quota system leaves no room for error: at current cap levels, the market runs out of material before year-end. Key actions: (1) lock in term contracts with diversified suppliers including Indonesian MHP sources; (2) evaluate recycling and black mass partnerships as a secondary feedstock hedge; (3) build inventory buffers ahead of Q4 2026 when quota exhaustion risks are highest; and (4) monitor ARECOMS announcements closely — any reduction in the 96,600 t cap would trigger another leg up in pricing. The LFP shift in EVs will moderate demand growth but cannot close a 10,700 t deficit on its own. Cobalt buyers should plan for $55,000–70,000/t range in the base case, with upside risk to $80,000+ if quotas are tightened further.