CMSC released a research report stating that the Democratic Republic of Congo (DRC) implemented a new quota management system on October 10, setting cobalt export limits at 96,600 tons for both 2026 and 2027. Major quotas were allocated to mining companies such as CMOC (03993) and Glencore (GLNCY.US), while local smelters received no direct quotas. Meanwhile, inventory depletion across the supply chain continues, with current cobalt product prices showing an inverted spread, suggesting further upside potential. Additionally, the U.S. Department of Defense plans to restart a $500 million cobalt reserve procurement tender, with awards expected by early February 2026, further highlighting cobalt’s strategic importance.
Key insights from CMSC include:
**DRC Quotas Finalized, Annual Exports Below 100,000 Tons** The DRC introduced a new quota system on October 10, replacing the previous cobalt export ban. The quotas for 2026 and 2027 are set at 96,600 tons each, comprising 87,000 tons as base quotas and 9,600 tons as ARECOMS strategic quotas. Major allocations went to mining firms like CMOC, Glencore, and Eurasian Resources Group, while local cobalt smelters were excluded.
**Supply-Demand Imbalance May Drive Prices Higher** The DRC’s quotas effectively cap global cobalt supply at around 200,000 tons. Factoring in recycling, total cobalt supply is projected at 206,000 tons in 2025, rising to 214,000 and 216,000 tons in 2026 and 2027, respectively. However, global cobalt demand is expected to grow steadily, reaching 221,000 and 231,000 tons in 2026 and 2027, leading to a structural deficit.
**Inventory Drawdowns Continue, De-stocking Persists Outside DRC** For example, China’s cobalt chloride inventory days dropped from 46 days in April to 39 days currently. Smelters’ intermediate product inventories saw the sharpest decline, falling from 45,000 tons in May to 17,000 tons—a reduction of 28,000 tons over five months. Combined with refined cobalt and cobalt sulfate inventories, total de-stocking reached 32,000 tons, averaging 6,400 tons per month.
**Price Inversion Signals Upside Potential for Refined Cobalt** Cobalt product prices are currently inverted, making refined cobalt economically attractive. Since the DRC first proposed banning raw cobalt exports in 2025, the average CIF China price for intermediate cobalt products surged 306%, from $5.95/lb to $24.15/lb. In China, refined cobalt is priced at 402,000 yuan/ton, while cobalt sulfate and cobalt tetroxide (metal equivalent) trade at 432,000 yuan/ton and 474,000 yuan/ton, respectively. The slower rise in refined cobalt prices suggests room for a catch-up rally as raw material inventories shrink.
**U.S. Restarts Cobalt Reserve Purchases** The U.S. Department of Defense is preparing to relaunch a $500 million cobalt procurement tender—the first large-scale purchase since the Cold War. On November 24, the Pentagon announced plans to issue a revised tender, with awards expected by early February 2026. The move follows a canceled August tender due to "serious issues" in the statement of work, reigniting strategic cobalt stockpiling efforts.
**Industrial Metals: Broad Price Gains on Rate Cut Expectations** Industrial metal prices, particularly copper, tin, and aluminum, are buoyed by easing monetary policy expectations. Other metals, such as tungsten (hitting record highs), antimony, and rare earths, are also in focus due to narrowing domestic-international price gaps.
**Risks:** 1. Uncertainty in mining policies. 2. Unanticipated shifts in global trade policies affecting regional supply chains. 3. Weaker-than-expected industrial demand.
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