China’s State Reserve Bureau (SRB) plans to purchase 15kt of cobalt metal over the next few months for domestic stockpiles, making it the highest recorded amount for a single purchase from the SRB.

This won’t be the first time the SRB has purchased cobalt metal, taking advantage of low prices to help support domestic producers and alleviate prices. Over the past years, this seems to be an ongoing trend within the cobalt market. In September 2020, SRB purchased 2kt and stockpiled a further 3kt in January 2021, triggering a 50% price recovery.

Purchasing by the SRB could help take some pressure off cobalt prices; however, the market is expected to remain in a state of oversupply, especially with CMOC Q1 2024 cobalt hydroxide supply (25kt contained Co) entering the market. In 2023, the SRB purchased a further 11.8kt of cobalt metalover the course of the year and its initial purchase caused a price rebound after a nine-month downward cycle since September 2022. However, the increase was short-lived, and prices continued to decline through 2023, weighed down by an oversupplied cobalt market.

Additionally, reports suggest the U.S Defense Logistics Agency (DLA) could also consider stockpiling cobalt metal later this year, driven by low inventories of cobalt metal (alloy grade) in US ports and plans to secure cobalt metal for applications within the aerospace and military sector. Purchasing from both the SRB and DLA could move to help bring about some price

recovery, especially when cobalt battery metal prices have been declining m-o-m due to weak downstream demand.

Nevertheless, the cobalt value chain is not as simple as just removing feedstock from the market to support prices and, as is the case for many markets, the idea of just one cobalt market” can be misleading when trying to understand supply, demand and price dynamics. The nuances of removing material into stockpiles will depend on separate supply chains for cobalt “intermediates”, “metals”, and “chemicals”, each having different drivers and pressure points. Imbalances in any of the three may result in a price reaction, despite an overall surplus supply.