Cobalt prices have risen by over 50% since the end of February following the Democratic Republic of the Congo’s (DRC’s) decision to suspend exports for four months in the face of global oversupply. Despite the recent rally, cobalt prices are still only $15.88 per pound, 60% lower than their peak levels in April and May 2022 (Figure 1).
Figure 1: Cobalt prices recently rallied by over 50% but remain far below all-time highs
Moreover, cobalt’s futures curve remains relatively flat. Prices two years forward are only $18.23 per pound, about 15% higher than the spot price and still far below peak levels of close to $40 per pound three years ago (Figure 2).
Figure 2: Compared to their price decline, cobalt and lithium futures curves are flat
Both low prices and the flat futures curve are directly attributable to the burgeoning supply of cobalt, which grew 21% in 2024 to 288,200 metric tons (MT) from 237,960 the previous year (Figure 3). Of the 50,240 MT increase in supply, 45,000 came from the DRC while most of the remainder came from Indonesia. One risk for the DRC is that export restrictions and higher prices could incentivize the development of additional cobalt mining capacity in Indonesia and elsewhere. Last year Indonesian production rose from 19,000 MT to 28,000 MT.
Figure 3: Cobalt production jumped 21% in 2024 and is up 1,600% since 1994
Open interest in cobalt remains robust at around 16,000 contracts as of mid-April 2025 (Figure 4). Average daily volumes (ADV) have been on the rise over the past year as well (Figure 5). This indicates solid demand for hedging on the part of both commercial buyers and sellers owing to strong demand stemming from its use in batteries and other applications as well as the persistent rise in mining supply.
Figure 4: Cobalt’s aggregate OI is steady at around 16,000 contracts
Figure 5: Cobalt’s ADV has been on the rise the past year
Cobalt is used in various ways. Its main use among U.S. manufacturers is for super alloys including those used in gas turbine engines. It is also used in cemented carbides and other metallic applications. Within the battery sector, cobalt is used in the cathodes of lithium-ion batteries which help to stabilize their chemical structure during charging and discharging, improving both their longevity and performance. Since lithium cobalt oxide and nickel manganese cobalt oxide can store more energy in smaller spaces, they are crucial for smartphones, laptops and EVs. Cobalt also improves thermal stability and reduces the risk of overheating and combustion.
Nevertheless, there has been a push to reduce the cobalt intensity of batteries owing to the price and supply risks since over 75% of global mining occurs in the DRC. In the U.S., use of cobalt in batteries appears to have dropped back somewhat in recent years (Figure 6). This is in stark contrast to lithium, which has overwhelming use (87%) in batteries (Figure 7).
Figure 6: Cobalt’s end uses among U.S. consumers has remained fairly stable
Figure 7: Lithium end uses have evolved heavily towards batteries
That said, EVs have been gaining a larger foothold among the world’s consumers. Back in 2010, EVs were close to 0% of the U.S. auto market. By 2024, they had risen to 11.4% of total vehicle sales. Hybrids also saw a sharp rise in sales as well (Figure 8). China has been the global leader in EVs, with sales accounting for 35% of total vehicle sales in 2023 and over 50% in 2024. As such, even if U.S. EV demand slows in response to policy changes, demand appears set to grow globally.
Figure 8: EVs and hybrids continue to gain market share
Despite efforts to reduce the cobalt intensity of batteries, overall demand could continue to rise as energy technology continues to evolve. The cost of solar energy and the cost of lithium-ion battery storage continue to decline at a pace of roughly 60% per decade (Figures 9 and 10).
Figures 9 and 10: The cost of solar energy and battery storage is falling by 60% per decade
Bottom Line: Key Upside and Downside Risks
Upside Risks for Cobalt Include:
- The concentration of supply (76%) In the DRC
- Continued growth in demand for batteries
- Falling costs for alternative energy and energy storage in lithium-ion batteries
Downside Risks for Cobalt Include:
- The DRC could end its export restrictions this summer, bringing on a flood of supply
- Supply could continue to ramp up in Indonesia and elsewhere in response to higher prices
- Efforts to reduce the cobalt intensity of batteries could slow demand growth
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All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
