Fastmarkets has projected a 36,000-tonne cobalt deficit for 2026 as the supply pipeline from the Democratic Republic of Congo contracts under the country's export quota regime. (FACT: Fastmarkets via industry sources, May 2026) The deficit estimate reflects a market where the DRC's annual cap of 96,600 tonnes — less than half the country's 2024 production of 211,000 tonnes — structurally constrains available supply even as demand from premium battery, aerospace, and defense segments continues to grow.
The deficit is not a projection of future risk — it is already being felt in physical markets. Chinese refined cobalt inventories are at critically low levels, with S&P Global analysts warning that stocks could reach dangerously low levels by early 2026. (FACT: AZO Mining, May 8, 2026) No cobalt hydroxide exports left the DRC from June 2025 onwards, and Q4 2025 quota allocations rolled into Q1 2026 with no clear dispatch timeline, creating a compounding effect where two quarters of suppressed shipments have drained downstream inventories across the supply chain.
The administrative machinery of the quota system has compounded the physical shortage. Congo's government gave cobalt miners until April 30, 2026 to utilise their Q4 2025 allocations before forfeiting unused volumes to the national strategic reserve. (FACT: Discovery Alert, May 15, 2026) Glencore, the world's second-largest cobalt producer, exported the greater part of its 2025 carryover quota during Q1 2026, with remaining volumes shipped in April. For Q1 2026 quotas, the deadline is June 30, 2026. The compressed shipping windows create a phenomenon where cobalt availability is determined not by mine production capacity but by administrative deadlines — a structural disconnect that exacerbates spot market volatility.
S&P Global's modeling projects that the quotas could push the market into a sustained deficit, lifting the DRC's export value by roughly 24% in 2027 versus 2024. (FACT: Semafor, May 4, 2026) The price response is already visible: benchmark cobalt prices have rallied approximately 160% since the February 2025 export ban was first imposed, while cobalt hydroxide — the main product shipped from the DRC — has more than quadrupled from Q4 2024 lows. (FACT: AZO Mining, May 8, 2026)
On the supply side, Glencore's deliberate 39% cobalt output cut in Q1 2026 reflects a strategy of producing only what its 22,800-tonne quota allows, funneling excess ore toward copper extraction instead. (FACT: Semafor, May 4, 2026) ERG slashed hydroxide output by 70% in 2025. CMOC, the one producer maintaining volume, operates under an estimated 31,200-tonne quota against guidance of 100,000-120,000 tonnes of annual capacity. (FACT: OilPrice.com, May 5, 2026) The gap between production capacity and permitted exports means the pipeline is running dry by design.
Action: Secure H2 2026 cobalt hydroxide volumes before the June 30 quota forfeiture deadline creates a concentrated shipping window that will tighten spot availability in Q3. For cobalt metal buyers, Glencore's inventory overhang (sufficient to fully deliver near-term quotas) means metal supply is less constrained than hydroxide — but expect the deficit to tighten metal availability by Q4. Evaluate Indonesian MHP as an alternative feedstock for supply chains flexible enough to accommodate the process chemistry change.
Horizon: The deficit is structural through at least end-2027, when the current quota framework expires. The 2027 allocation for Glencore (18,800 tonnes, -17.5% vs 2026) signals further tightening.
Trigger: Watch monthly DRC export volumes. If Q2 2026 shipments do not materially exceed Q1's 48,800 tonnes, the administrative bottleneck is worsening and the deficit widens. Monitor CMOC's in-country stockpile — if it exceeds 50,000 tonnes by year-end, policy intervention from Kinshasa becomes likely.