How Supply Controls Are Reshaping the Cobalt Market in 2025-2026

The cobalt market witnessed one of its most dramatic turnarounds in recent history, pivoting from chronic oversupply to emerging scarcity. The catalyst? A series of decisive policy moves that fundamentally rewired global cobalt supply chains.

The Shock That Changed Everything

At the start of 2025, cobalt appeared trapped in a deflationary spiral. Prices had collapsed to nine-year lows around US$24,343 per metric ton, weighed down by years of supply growth that far outpaced battery demand expansion. The Democratic Republic of Congo (DRC), controlling roughly 75 percent of global cobalt supply, suddenly shifted the equation by banning hydroxide exports in February.

The impact was immediate. Within weeks, cobalt metal prices leaped from US$24,495 to above US$34,000. By year-end, the swing had become historic: sulfate prices surged 266 percent, hydroxide climbed 328 percent, and metal prices ascended 130 percent.

Indonesia Steps Into the Spotlight

With DRC supply restricted, the market attention turned to the second-largest producer: Indonesia. Unlike the DRC’s mine-based cobalt, Indonesian output emerges as a byproduct of its laterite nickel processing. Through specialized plants using high-pressure acid leaching (HPAL), these facilities produce mixed hydroxide precipitate—an intermediate rich in both nickel and cobalt.

Indonesia’s 31,000 metric tons of 2024 cobalt output represents roughly 10 percent of global supply. Planned HPAL expansions target 500,000 tons per annum of precipitate, potentially yielding 50,000 tons of cobalt annually. Chinese refiners increasingly view Indonesian material as a viable substitute for restricted DRC cobalt hydroxide, offering lower-cost pathways to battery-grade feedstock.

Q2-Q3: A Precarious Balance Emerges

Through mid-year, prices consolidated in a broad US$33,000 to US$37,000 trading band. The DRC extended its export restrictions through September, cementing expectations of prolonged supply tightness. Chinese refiners drew down inventories rather than secure fresh supplies, and trade flows revealed Indonesian capacity beginning to absorb some demand displacement.

Yet the picture remained fragile. Analysts warned that Indonesian supply, while growing, would prove insufficient to fully offset DRC constraints. Constrained refinery feedstock became the norm, with tight inventories outside the DRC signaling further price support ahead.

The Quota Framework Locks in Higher Prices

October brought structural clarity when the DRC replaced its blanket ban with a rigid quota system capping annual exports at approximately 96,600 metric tons—roughly half of 2024 levels. Q4 2025 allocations were further limited to 18,125 metric tons, creating acute scarcity in the final quarter.

This framework propelled cobalt above US$47,000 by late October, the highest level since early 2023. Major producers like CMOC Group received significant allocations, but overall market inventory remained strained. The message was clear: supply control, not demand growth, now dictates market dynamics.

2026: Deficit Territory Ahead

Looking forward, industry forecasters project the cobalt market entering its first sustained deficit in years. Projected shortfalls around 10,700 metric tons against demand exceeding 292,300 metric tons reflect the quota system’s bite. Average cobalt prices are expected to hover near US$55,000 in 2026, sustained by structural export limits and depleting stocks.

However, elevated prices carry a hidden risk. EV manufacturers, facing persistent high costs, will likely accelerate transitions to low-cobalt and cobalt-free battery chemistries where feasible. This demand destruction could ultimately moderate price trajectories and reshape long-term battery material hierarchies.

The cobalt market’s 2025 transformation from chronic glut to emerging deficit was neither organic nor inevitable—it was policy-engineered. The supply control regime now taking shape promises to reshape investment, production, and chemistry decisions across the entire battery value chain for years to come.