Price action: steady strength on tight fundamentals. LME cobalt metal is trading around $57,500/t in late July, up from $56,290/t in March and sharply above the February 2025 trough near $22,600/t (a 74% decline from the 2022 peak). The market has completed a full cycle — crash, recovery, stabilization — and now sits in a range that reflects the new reality of DRC-constrained supply and EV-driven demand.
The key insight for procurement teams: cobalt is pricing as a structurally tight market, not a cyclical one. The DRC's export quota system, which replaced the February 2025 export ban in September 2025, caps cobalt hydroxide exports at 96,600 tonnes per year for both 2026 and 2027. This is roughly 30% below the unconstrained export volumes of 2022-2024, creating an artificial supply ceiling that the market has not fully priced in.
DRC supply: the quota is real and biting
The Democratic Republic of Congo accounts for 70-80% of global mined cobalt production. The export quota of 96,600 t/year (87,000 t base plus 9,600 t strategic reserve) was set by ARECOMS in September 2025 to replace the temporary export ban that had caused acute price spikes earlier that year. Chinese-invested miners, who control most of the DRC's production through long-term relationships with downstream refiners, have priority access to the quota allocation.
Shanghai Metals Market expects goods from Q4 2025 and Q1 2026 will arrive at Chinese ports in July 2026, with further batches from Q2-Q3 2026 arriving later in the year. This means the physical supply chain is running on a 6-9 month lag from mine to refinery. Current upstream and downstream raw material inventories can sustain Chinese operations through June, but the window is tight. Any disruption to DRC shipment timing — port delays, customs changes, political instability — would immediately pinch Chinese feedstock availability.
Indonesian mixed hydroxide precipitate (MHP) supply, a significant alternative feedstock, is expected to be at least flat year-on-year at ~53,000 t metal equivalent. While MHP provides partial relief, it does not fully offset DRC constraints. Non-DRC quota sources plus high-cobalt recycling are expected to provide only ~12,000 mt metal content in H2 2026.
Demand: bifurcation is the new normal
Global cobalt demand reached ~213,500 tonnes in 2025, with EVs as the primary growth driver. But the demand story is no longer uniform. The battery chemistry bifurcation that began in 2023-2024 has hardened into a structural divide:
China: More than 80% of EVs sold in 2025 used LFP batteries. LFP reached 60%+ of global battery cell capacity, sharply reducing cobalt intensity in the world's largest EV market. For cobalt demand in China, the LFP shift is effectively complete for most vehicle segments. The remaining cobalt demand comes from premium EVs, consumer electronics, and industrial applications.
North America and Europe: High-nickel NCM and NCA chemistries still power 80-90% of EVs sold. Every one of the top 10 best-selling BEVs in both regions relies on cobalt-containing cathodes. This geographic divergence means cobalt demand growth is concentrating in Western markets — even as refining remains predominantly Chinese.
SMM's H2 2026 demand estimate for LCO, cathode additives, and cobalt powder is ~42,000 mt metal content, up from ~39,000 mt in H1. The battery-grade sulphate market is particularly sensitive to Indonesian MHP supply dynamics, which influence the NCM precursor pricing.
Analyst outlook: upside bias maintained
SMM's analysis is direct: cobalt prices in H2 2026 are more likely to rise than fall. Any external disruption would amplify upside due to the structural tightness of supply. Benchmark Mineral Intelligence and Fastmarkets share this view, with price forecasts ranging from $55,000-70,000/t for LME cobalt metal for the remainder of 2026.
The bear risks are real but manageable: faster-than-expected LFP adoption in Western markets, DRC quota relaxation, or a sharp macro-driven EV demand slowdown. None of these are the base case. The LFP threat to cobalt demand is a medium-term structural headwind, not a 2026 catalyst.
Cobalt buyers in H2 2026 face a market where DRC policy is the dominant variable. The quota system creates a ceiling on hydroxide availability but also builds in upside price optionality — any supply disruption triggers a sharp repricing. For battery-grade hydroxide and sulphate, lock in term contracts tied to LME metal with caps on payables where possible. The physical tightness is concentrated in feedstock rather than exchange metal, so hydroxide payables vs LME are likely to stay firm. Consider diversifying toward non-DRC sources (Canada, Australia) and recycling streams for medium-term supply resilience. For Western OEMs, the geography of demand — NCM in NA/Europe vs LFP in China — means cobalt price sensitivity differs by region. European buyers should expect less price volatility than their Chinese counterparts, whose market is more directly exposed to DRC feedstock variability.