Glencore Halts Cobalt Stockpiling Amid Ongoing Market Surplus
Glencore, the Swiss-based commodities giant, has announced that it has stopped accumulating cobalt reserves, according to CEO Gary Nagle. Despite this decision, the cobalt market is anticipated to remain in surplus for the next 18 to 20 months due to increased production, particularly from the Democratic Republic of Congo (DRC).
Last August, Glencore revealed it had begun stockpiling cobalt in the first half of 2023 to support market prices by limiting supply. However, the company did not disclose the exact quantity of cobalt reserved. On Wednesday, Nagle refrained from providing specific details on current inventory levels.
The surplus in cobalt supplies has been driven by accelerated production in the DRC, which is the leading global producer. This has resulted in cobalt prices dropping to around $12 per pound, the lowest level since 2016. Nagle explained that clearing this surplus could take up to two years, while also noting robust demand from sectors such as aerospace and defense.
"We are no longer actively stockpiling cobalt; instead, we have started to sell some of our reserves," Nagle stated at a recent briefing. Meanwhile, China's CMOC Group is ramping up cobalt production in the DRC, with an expected output of 100,000 tons by 2028. According to Darton Commodities, the DRC was responsible for 77% of global cobalt production last year, totaling more than 170,000 tons.
Analysts at Macquarie predict the cobalt market will continue to experience surpluses of around 28,000 tons this year and 24,000 tons in 2025. Nagle emphasized that this situation should be viewed as a temporary imbalance rather than a permanent shift in market dynamics, citing the lack of new major copper-cobalt mines as an opportunity for market correction.
Despite the challenges, cobalt prices are unlikely to return to the highs of 2018 and 2022, as the electric vehicle industry is moving towards battery technologies that do not require cobalt. This technological shift is expected to reduce demand from the EV sector, impacting overall market conditions.
