Cobalt Intermediate Product Prices Continue Rising Despite Weak Demand in 2025

Cobalt prices rise amidst glowing crystal.

Why Cobalt Intermediate Product Prices Are Rising in 2025

The cobalt market has entered a period of significant volatility in 2025, with intermediate product prices showing persistent upward momentum despite downstream resistance. This comprehensive analysis examines the key drivers behind this trend and explores the market dynamics shaping this critical battery metal sector.

What's Happening with Cobalt Intermediate Product Prices?

The spot price of cobalt intermediate products continued to rise throughout July 2025, according to the latest SMM Weekly Review. Low-priced materials are currently trading in the 12.3-12.4 range, while high-quality products are being quoted just below the 13 price point (likely USD/lb, though the market sometimes uses alternative metrics).

"Traders continued to raise their quotations amid expectations of a price increase," reports the SMM New Energy Research Team in their July 17 assessment, highlighting how supply-side pressures are driving the market despite resistance from buyers.

The price gap between seller expectations and buyer willingness is gradually narrowing but still remains significant enough to limit transaction volumes. This standoff has created a market characterized by frequent price inquiries but relatively few completed deals, as buyers remain hesitant to accept the new price reality.

Weekly price increases continue to reflect the ongoing market tightness, with each successive trading session establishing slightly higher benchmarks despite clear signals of weak downstream consumption.

Key Market Indicators to Watch

Supply concentration represents one of the most critical market shifts in 2025, with resources increasingly consolidated among fewer participants. This concentration amplifies price volatility as individual supplier decisions carry greater market impact.

Trader quotation strategies have notably evolved from traditional cost-plus pricing to more anticipatory models that factor in expected future shortages. This shift reflects growing confidence among market participants that supply constraints will persist through the remainder of 2025.

Smelter inventory levels have emerged as perhaps the most reliable indicator of near-term price pressure. The SMM report notes that "most enterprises maintained a focus on consuming their own inventory," while "smelters with relatively low inventory inquired about prices in the market," though many remain reluctant to purchase at current price levels.

What's particularly notable is that price momentum continues despite unmistakable signals of weak downstream demand—a divergence that underscores the severity of supply-side constraints.

What Factors Are Driving the Supply Constraints?

DRC Policy Impact on Global Supply

The DRC cobalt export ban has created significant raw material shortages that reverberate throughout the global supply chain. As the source of approximately 73% of the world's cobalt (according to USGS 2024 data), any policy shift in the DRC creates outsized impacts on global markets.

"Affected by the DRC's extension policy, China's cobalt intermediate products will still face a shortage of raw materials in the future," the SMM New Energy Research Team notes, highlighting the direct causality between Congolese regulation and global supply dynamics.

Miners have responded to the regulatory uncertainty by suspending quotations entirely, further restricting already tight supply channels. This withdrawal of reliable pricing has forced buyers to navigate a market with severely limited price discovery mechanisms.

Resource concentration continues to intensify as smaller suppliers exit the market, unable to manage the heightened regulatory complexities and financial risks. Industry experts anticipate these supply chain disruptions will continue through the remainder of 2025, with limited opportunity for alternative sourcing to meaningfully offset the shortage.

Trader Behavior and Market Speculation

Traders are actively raising quotations based on bullish price expectations rather than immediate cost considerations. This speculative positioning represents a significant shift from traditional trading patterns that historically tracked more closely with actual production costs.

Inventory positioning has become increasingly strategic as supply tightens, with many traders building stockpiles in anticipation of further price increases. This behavior, while rational from an individual trader perspective, collectively amplifies market shortages by removing material from active circulation.

Market speculation is driving price movements beyond what fundamental supply-demand metrics would suggest, creating a self-reinforcing cycle where price increases generate expectations of further increases.

The limited spot transactions resulting from this environment have created significant price discovery challenges, with benchmark prices increasingly detached from actual transaction values. Buyers report difficulty in obtaining consistent quotes for equivalent material, further complicating procurement strategies.

"The cobalt market in 2025 has become a classic example of how policy decisions in resource-rich countries can ripple through global supply chains, creating price impacts that far exceed the direct production costs," notes an industry analyst who follows the battery metals investment sector.

How Are Cobalt Smelters Responding to Market Conditions?

Production Cost Challenges

Smelters are facing operational losses due to the rapid escalation in input costs, according to the SMM report. The cost-price squeeze has intensified as intermediate product prices outpace the corresponding increases in refined cobalt and cobalt chemical pricing.

Production efficiency has become a critical factor in maintaining operations, with smelters investing in process optimizations to extract maximum value from increasingly expensive inputs. Those with outdated technology or inefficient recovery rates face particular challenges in the current environment.

Operational decisions are increasingly influenced by raw material availability rather than demand signals, inverting the traditional production planning process. Many facilities report running below capacity not because of insufficient orders, but due to challenges in securing adequate feedstock.

The technical complexity of cobalt smelting further complicates adaptations to changing market conditions. Unlike some other metals, cobalt intermediate processing requires specialized equipment and expertise that cannot be rapidly scaled or modified in response to short-term market shifts.

Inventory Management Strategies

"Most enterprises maintained a focus on consuming their own inventory," the SMM report notes, highlighting how smelters are prioritizing working through existing stockpiles rather than purchasing at current elevated prices.

Selective market inquiries are emerging primarily from smelters with critically low stock levels who face production interruptions without new supply. These entities find themselves in particularly challenging negotiating positions, as sellers recognize their urgent need.

Strategic purchasing decisions now balance immediate production needs against future price expectations, with some smelters willing to accept temporary production reductions rather than purchase at what they consider peak prices.

Inventory optimization has become a key competitive advantage in this volatile market, with sophisticated operations maintaining detailed visibility into their material flows and consumption patterns. This capability allows for more precise timing of necessary purchases, potentially avoiding the highest price points.

  • Smelters with integrated mining operations report significant advantages
  • Just-in-time inventory models proving particularly vulnerable
  • Regional storage strategies emerging to balance accessibility with cost
  • Financial hedging increasingly coupled with physical inventory management

What's Happening on the Demand Side?

Downstream Market Response

Weak demand signals persist despite the supply-side pressures, creating a fundamental market imbalance. End users in battery manufacturing, aerospace, and other cobalt-consuming industries report difficulty in passing through the increased raw material costs to their customers.

Price sensitivity has created significant resistance to accepting the new market reality, with many downstream buyers delaying purchases in hopes of a market correction. This wait-and-see approach contributes to the low transaction volumes noted in market reports.

Demand inhibition concerns are growing as raw material prices continue upward, with the SMM report specifically noting that "attention needs to be paid to the inhibition of downstream demand caused by the increase in raw material prices."

Substitution and formulation adjustments are being actively explored across multiple industries to mitigate cost impacts. Battery manufacturers in particular are accelerating the deployment of lower-cobalt cathode formulations, with NMC 811 (8 parts nickel, 1 part manganese, 1 part cobalt) and LFP (lithium iron phosphate) chemistries gaining market share specifically due to cost considerations.

Market Transaction Dynamics

Transaction volumes remain low despite increased price inquiries, creating a market characterized by extensive information exchange but limited actual material movement. This pattern typically indicates a market in transition, with neither buyers nor sellers confident in current price levels.

Buyer-seller price expectations continue to create negotiation challenges, though the gap has narrowed somewhat in recent weeks. Sellers report increased flexibility in terms and conditions, though core price expectations remain firm.

Spot market activity is now concentrated almost exclusively among entities with immediate supply requirements who cannot defer purchases. These necessity-driven transactions often occur at premium prices, further skewing market benchmarks.

Contract negotiations have become increasingly complex amid the price volatility, with traditional annual agreements giving way to shorter terms and more flexible pricing mechanisms. Formulas linking prices to published indices are being supplemented with caps, collars, and other risk management provisions.

What's the Outlook for Cobalt Intermediate Products?

Future Supply-Demand Balance

Continued raw material shortages are expected in the Chinese market through at least Q4 2025, according to the SMM report. The structural nature of the current supply constraints suggests limited opportunity for rapid improvement.

Upward price momentum is likely to persist in the near term, though the rate of increase may moderate as downstream resistance intensifies. Market analysts suggest that while absolute price reductions are unlikely, a plateau could emerge in the coming months.

Potential demand destruction looms if prices exceed downstream tolerance thresholds, particularly in price-sensitive applications where substitution is technically viable. The battery sector in particular has demonstrated willingness to reformulate when cobalt prices reach certain levels.

Supply chain adjustments are expected as the market adapts to the new pricing environment, with vertical integration becoming increasingly attractive to both miners and end users seeking to bypass market volatility. Furthermore, some companies are pursuing the Halls Creek cobalt expansion and similar projects to diversify their supply sources beyond the DRC.

Price Trajectory Considerations

The spot price of cobalt intermediate products continued to rise, but this upward momentum is likely to be tempered by downstream demand constraints as 2025 progresses. While supply fundamentals support continued strength, the limited ability of end users to absorb higher costs creates a natural ceiling.

This price ceiling will likely be determined by substitution economics, particularly in battery applications where alternative chemistries exist. Previous cobalt price cycles suggest that sustained prices above certain thresholds accelerate the transition to cobalt-free technologies.

Volatility is expected to continue as the market seeks a new equilibrium, with significant price swings possible on relatively minor supply or demand news. This instability presents both risks and opportunities for market participants.

Regional price differentials are emerging as supply chains fragment in response to geopolitical considerations and logistics challenges. Chinese domestic prices now follow patterns somewhat distinct from international benchmarks, creating arbitrage opportunities for sophisticated traders, according to the Cobalt Market Report 2023.

FAQs About the Cobalt Intermediate Product Market

What are cobalt intermediate products?

Cobalt intermediate products include materials like cobalt hydroxide and mixed hydroxide precipitate (MHP) that serve as key inputs for producing refined cobalt and cobalt chemicals. These materials typically contain 20-40% cobalt content and undergo further processing before reaching end applications in batteries, superalloys, or other products.

Intermediate products represent a critical link in the supply chain between mining operations (primarily in the DRC) and refined metal production facilities largely concentrated in China.

Why is the DRC policy so significant for cobalt markets?

The Democratic Republic of Congo accounts for approximately 73% of global cobalt production according to the USGS 2024 Mineral Commodity Summaries, making any policy changes regarding mining, export, or processing highly influential on global supply chains and pricing.

The country's dominance in cobalt production stems from its unique geological endowment, with the Central African Copperbelt containing the world's richest cobalt deposits. This concentration of resources creates an unavoidable chokepoint in global supply chains, which has significant implications for the overall critical minerals demand surge expected through 2025.

How do cobalt intermediate product prices affect battery production costs?

Cobalt intermediate products represent a significant component of battery cathode material costs, with price increases potentially impacting production economics and end-product pricing for electric vehicles and energy storage systems.

According to Benchmark Mineral Intelligence (2025), cobalt inputs can account for 15-20% of cathode costs in traditional NMC formulations, though this percentage varies based on specific chemistry and prevailing market prices. As cathodes represent roughly 30-40% of total battery costs, cobalt price movements have material impacts on overall battery economics.

What alternatives exist if cobalt prices become prohibitive?

Battery manufacturers continue developing lower-cobalt and cobalt-free cathode chemistries, with nickel-rich NMC (such as 8-1-1 formulations containing only 10% cobalt), LFP (lithium iron phosphate with zero cobalt), and emerging technologies offering potential alternatives if cobalt costs become unsustainable.

According to Nature Energy (2024), global adoption of LFP cathodes increased by 23% in 2024 alone, driven partly by cobalt price concerns. Sodium-ion batteries represent another emerging technology that avoids cobalt entirely, though energy density limitations currently restrict their application to stationary storage and economy vehicle segments.

Beyond batteries, aerospace and other specialized applications have fewer immediate substitution options, making these sectors particularly vulnerable to sustained price increases. This vulnerability highlights the importance of ongoing mining industry trends toward diversification and innovation in materials processing.

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Discovery Alert does not guarantee the accuracy or completeness of the information provided in its articles. The information does not constitute financial or investment advice. Readers are encouraged to conduct their own due diligence or speak to a licensed financial advisor before making any investment decisions.

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