China cobalt stocks jump as Congo exports ban sparks “chaos”

Cobalt stocks rose in China on Tuesday as a surprise export ban in the Democratic Republic of Congo lifted the near-term outlook for the material used in alloys and batteries.

Shares in Nanjing Hanrui Cobalt Co. jumped as much as 17% in Shenzhen, while Zhejiang Huayou Cobalt Co. rose as much as 7.8%. Meanwhile, CMOC Group Ltd., which has been ramping up its two giant mines in Congo, slipped 2% in Hong Kong.

Congo, the top producer of the raw material, is suspending cobalt exports for four months in an attempt to rein in global oversupply. The government also said it will prepare additional measures to balance the market. The news has sent shockwaves through the industry as Congo’s cobalt production accounts for about three-quarters of world’s total.

“Everybody is panicking and we don’t know how to secure the material,” said Ian Liu, cobalt procurement director at CNGR Advanced Material Co., a Chinese battery-component manufacturer. “We need a long-term mechanism to support cobalt prices, not a sudden halt on exports, which will cause chaos downstream,” he said at a Fastmarkets conference in Shanghai on Tuesday.

The African nation’s production has increased in recent years thanks to the expansion from China’s CMOC, but that has also pushed down prices. Benchmark metal has dropped below $10 a pound, a level not breached for 21 years apart from a brief dip in late 2015, according to Fastmarkets data. Cobalt hydroxide, the main form of the metal produced in Congo, has slid below $6 a pound.

Congo’s policy could cut global cobalt supply by around 20,000 tons a month, but the market has adequate inventory to fill the gap, Xu Aidong, an analyst with Beijing Antaike Information Co. said on the sidelines of the Shanghai conference.

While questions remains over policy uncertainty in the Congo after four months, the ban, for now, could be a blessing for companies in Indonesia, the second-biggest cobalt producing country that’s seeing a growing share in the global market.

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