China is poised to purchase a record volume of cobalt for its state reserves this year, taking advantage of prices that have plummeted to their lowest levels since 2019.
The National Food and Strategic Reserves Administration, which oversees China’s official commodity stockpiles, plans to buy around 15,000 tons of refined cobalt, according to sources familiar with the matter.
The procurement could start as early as next month, with the tender price expected to be between 200,000 yuan and 220,000 yuan per ton, equivalent to approximately $12.5 to $13.8 per pound.
The administration did not respond to a request for comment. Reuters previously reported the planned purchases.
Cobalt, used in electric-vehicle batteries and aerospace alloys, has fallen to a five-year low due to increased production in the Democratic Republic of Congo and Indonesia, where it is a by-product of copper or nickel mining. China is responsible for about 80% of global cobalt refining.
The National Food and Strategic Reserves Administration, formerly known as the State Reserve Bureau, manages inventories of various commodities, including crude oil, pork, and copper.
Its purchases can significantly impact market prices. Last year, the administration bought an estimated 8,700 tons of cobalt, according to Darton Commodities, a specialist trading house.
A global cobalt surplus widened to about 14,200 tons in 2023, according to a report by the Cobalt Institute and Benchmark Mineral Intelligence. They forecast that the surplus will continue in the short term as supply growth outpaces demand.
Battery materials, including cobalt, have seen broad declines over the past year. Cobalt is also among the metals deemed “critical” by Western nations seeking to reduce reliance on China’s supply chain and avoid future shortages.
Earlier in May, a senior US official accused China’s CMOC Group Ltd. of using “predatory” tactics to depress prices by flooding the market with cobalt from DRC mines.
CMOC, which surpassed Glencore as the world’s top cobalt producer last year, announced in March that its DRC mines would produce 60,000 tons of cobalt this year.
