South African unrest bolsters Chinese cobalt prices

Civil unrest in South Africa, a key transit point for exports of cobalt feedstock from the Democratic Republic of Congo (DRC), has bolstered Chinese cobalt prices, driven by expectations of a shortage of cobalt feedstock supplies because of delayed imports.

The DRC is the world's largest producer of cobalt feedstock, contributing more than 70pc of the global supply of 135,000 t/yr metal equivalent in 2020. More than 90pc of China's cobalt feedstock imports, which total 86,000 t/yr metal equivalent, come from the DRC. China's combined imports of cobalt raw materials, including concentrates and intermediate products, rose by 11.8pc from a year earlier to 33,170t of metal equivalent over January-May 2021, with feedstock supplies from the DRC accounting for 99pc.

South Africa's Durban port is a critical transit point for supplies of cobalt feedstocks, including hydroxide, carbonate and concentrate, from Africa to major consumer countries such as China and Finland.

The civil unrest erupted a week ago in former South African president Jacob Zuma's home province of KwaZulu-Natal following his imprisonment and spread to other regions, including Gauteng. Main routes were blocked by protesters, which disrupted the transportation of goods from the Durban port.

Port operations at Durban and Richards Bay, also in South Africa, are gradually returning to normal but fuel and food shortages, as well as remaining road closures in the Durban port vicinity, are keeping the supply chain restricted and creating backlogs as trucks cannot get in and out of the ports.

The civil unrest has had different impacts on cobalt feedstock suppliers. Some reported only a limited impact on their raw material transportation and some said their feedstock shipments were delayed by 15-30 days. Market insiders expect fewer cobalt feedstock imports than scheduled to arrive in China next month, which will boost market sentiment and support Chinese cobalt prices.

Argus last assessed cobalt metal prices higher at 365-385 yuan/kg ($56-59/kg) ex-works on 15 July from Yn362-382/kg ex-works on 13 July. Prices rose further to Yn368-390/kg ex-works today.