According to three sources familiar with the matter, China plans to buy up to 15,000 metric tons of cobalt metal from local Chinese producers over the next few months for its domestic stockpiles. This would be a record amount for a single purchase by China’s National Food and Strategic Reserves Administration.
The planned purchase would be a significant increase compared to the 8,700 tons of cobalt metal that the state stockpiler bought last year. China dominates the processing of cobalt, most of which is sourced from the Democratic Republic of Congo (DRC), where it is a byproduct of copper production. Cobalt metal is used in the defense, aerospace, and communication industries.
The large-scale cobalt purchase by the Chinese state stockpiler could help offset some of the surplus in the market this year. Industry sources estimate that the surplus would be narrowed down to around 20,000 tons, compared to surpluses of around 11,000 and 16,000 tons in 2022 and 2023, respectively.
However, the sources also indicate that the purchase may not have a significant impact on the overall oversupplied cobalt market, given the large production volumes coming from the DRC, which accounts for 77% of global cobalt supply.
Two of the sources suggest that some of the cobalt purchased by the Chinese state stockpiler could be for military equipment. The third source said the producers are looking for a ballpark price of around 205 yuan or $12 per pound, close to the current cobalt prices, which are near five-year lows.
The National Food and Strategic Reserves Administration did not respond to requests for comment, and no agreement has yet been reached between the stockpiler and local producers, according to the sources.