Cobalt: China’s hydroxide imports from the DRC down to 16-month low in May

China recently released trade statistics for May, showing the country’s imports of crude cobalt hydroxide decreased significantly in the month, down by 64% from April and 61% y-o-y. This has marked the lowest point for DRC shipments to China since February 2019 (Chinese New Year fell in that month).

Roskill View

Crude cobalt hydroxide exports from the DRC to China represent the vast majority of global trade flows for cobalt intermediates. These exports have increased in recent years, with more mined cobalt units being processed into their intermediate form within the DRC prior to export. DRC-origin hydroxide is typically exported via the port of Durban in South Africa, with most material shipped to refineries in China with a one to two month transport period.

As Roskill commented in mid-April, the series of prevention and control measures to contain the spread of COVID-19 pandemic in Africa, including the lockdown in South Africa from late March, has severely impacted shipments of cobalt hydroxide from the DRC to China. Most suppliers had to look for other alternatives, re-routing shipments via neighbouring countries such as Mozambique, Tanzania and Namibia. This has led to months-long delays in deliveries, evidenced by shrinking hydroxide units arriving in Chinese ports in May.

Payables for hydroxide continued their downward trend in April and bottomed out in the low 60s in early May, given that stocks overhanging the market were still sufficient to support normal operations for most refineries. From mid-May, some refineries (particularly those without access to long-term contacts) started to restock hydroxide feedstocks in anticipation of limited hydroxide availability ahead. As a result, payables rose back up to the high 60s in late June.

Moving to Q3, Roskill maintains the view that spot tightness in the cobalt hydroxide market is set to continue, but that the situation will likely ease towards the end of the quarter as logistical restrictions have gradually been lifted in Africa since end of May.

Roskill’s NEW Cobalt: Outlook to 2030, 16th Edition report will be published in September 2020. The report will address the opportunities and challenges facing the cobalt market over the coming decade. For more information or to subscribe, click here.

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This article was written by Ying Lu. Please get in touch below if you wish to discuss further:

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