Cobalt and nickel: DRC quotas tighten cobalt chemistry while China’s matte and sulfate flows reshape costs
Cobalt chloride and refined cobalt rallied as DRC quota details surprised to the downside and shipments remain delayed into late December, pushing producers to suspend offers. In nickel, China’s September matte imports surged to 56,757 mt while nickel sulfate net imports slipped 4% MoM, tightening MHP payables. We map how these feedstock shocks move battery sulfate costs and NMC competitiveness—and set a 1–6 month outlook: cobalt bullish, nickel neutral with volatility.
Cobalt: from ban to quotas, tightness persists
Quotas and timing: Market consensus expects earliest cobalt units to reach China late December–early January; quota allocations were below expectations for Chinese firms—supporting prices.
Spot signals: Cobalt chloride offers were largely suspended, with sporadic trades around ~102,000 yuan/mt as some producers floated 110,000 yuan/mt—a classic tight-feedstock pattern.
Refined cobalt: Spot fluctuated upward as smelters paused quotations and traders lifted offers; downstream stayed JIT, widening the spread to salts until reverse-smelting economics cap it.
Medium-term context: China’s cobalt hydroxide imports collapsed after force majeure and the export suspension; inventories of cobalt metal remain relatively high, making metal-to-salt substitution economically attractive if the spread persists—an important release valve for salts tightness.
Nickel: feedstock economics drive sulfate costs
China’s September flows:
Nickel matte imports: 56,757 mt, +236% MoM, +66% YoY, led by Indonesia/Russia.
Nickel sulfate: 6,497 mt (metal content) imports, net imports 6,320 mt, –4% MoM / +57% YoY; Indonesia pulled back while Finland/South Korea increased shares.
MHP payables: Spot tightness and DRC cobalt constraints lifted MHP payables (Platts ~88.3% basis LME by mid-Oct), with Indonesian MHP quoted around $13,331/mt all-in equivalent; China’s MHP imports in August were up ~40% YoY.
Domestic prices: SHFE refined nickel held 120,000–124,000 yuan/mt reference; macro noise (rates, tariffs) adds volatility but fundamentals remain soft.
Implication: For nickel sulfate producers, higher matte/MHP input costs link quickly to sulfate cash costs, keeping NMC precursor margins thin unless downstream recovers.
Battery chemistry impact: NMC vs LFP
China battery mix: LFP continues to outgrow NMC, with NMC’s share oscillating in the low-20s%—limiting elastic downstream demand for cobalt-heavy chemistries in China even as prices rise.
Export channels and premium markets: Tight cobalt may reallocate NMC capacity to export-oriented lines and premium performance segments where price pass-through is easier.
What to watch next
Quota implementation cadence and customs clearance: if arrivals slip past January, cobalt salts tightness could extend into Q1, pulling metal-to-salt substitution forward.
Matte trade lanes: a sustained high run-rate of matte imports would anchor sulfate supply but at a higher cost base unless MHP availability loosens.
Policy/tariffs: macro trade rhetoric remains a swing factor for nickel pricing bands in Q4.
Outlook
Cobalt: Bullish (1–3 months) on delayed flows and conservative quota allocations; neutral-to-firm (3–6 months) as arrivals normalize and potential metal-to-salt substitution caps spikes.
Nickel: Neutral with volatility. Matte/MHP tightness sustains sulfate costs, but broader nickel oversupply and tepid stainless/battery draw keep rallies contained.