China’s Cobalt Prices Set to Drop Further in 2025 as Oversupply Intensifies

Market Faces Persistent Downward Pressure Amid Rising Supply and Weak Demand

The Chinese cobalt market is heading for another year of price declines in 2025. This decline is driven by expanding nickel and copper production—both of which yield cobalt as a by-product—and sluggish demand from key industries.

Market analysts anticipate that cobalt metal prices could dip below $9/lb. Chinese integrated producers treat cobalt as a secondary credit to their nickel and copper operations. Unlike independent refiners, these producers operate with ultra-low production costs. This allows them to continue mining and refining despite declining cobalt prices.

As one industry source put it:

“Their cost of production is around $4,000 per ton, and they’re selling at $9,000 per ton. Even if they lose $50 million on cobalt, they’ll still gain $700 million from copper—so they will dig as much as possible.”

“Industry Source”

This aggressive production model is expected to prolong the current oversupply, keeping prices under sustained pressure.

Chinese Producers May Continue Operating at a Loss

In contrast to non-Chinese refiners, which may curb production if prices fall below $9/lb, some Chinese mining firms and refiners are prepared to refine hydroxide into metal. Even at a loss-making $7-8/lb, they continue refining.

There is speculation that some Chinese producers may attempt to secure floor pricing clauses in their contracts. These clauses ensure a minimum price to protect against excessive losses. However, it remains unclear whether such measures will be successful in stabilizing the market.

Nickel and Copper Expansion to Fuel Oversupply

Cobalt’s price trajectory is heavily linked to Nickel and Copper mining, as both metals generate cobalt as a by-product.

• Nickel production is expected to increase in 2025. New Class 1 nickel refineries in China and Indonesia will ramp up operations. This will likely hold LME three-month nickel prices in the $15,000-17,000 per ton range. Current prices are down sharply from $30,000 per ton at the start of 2023.
• Copper production is also rising. Major mine expansions like Kamoa-Kakula in the Democratic Republic of Congo (DRC) are adding further cobalt supply to the market.

Because cobalt is a minor revenue source for copper miners, these companies will continue extracting it. They will continue as long as copper prices remain profitable, further adding to the supply glut.

Demand Struggles to Keep Up with Supply Growth

While cobalt demand in China has surged by 40%, global consumption has been weaker than expected:

• Europe’s electric vehicle (EV) market has slowed, leading to weaker demand for cathode active materials like cobalt.
• The European chemicals sector, particularly in Germany, has been hit hard by high energy costs and economic downturns. These factors are reducing demand for cobalt-based compounds.

Even if cobalt prices rise slightly, China has excess refining capacity. This refining ability means it can easily absorb more hydroxide and refine it into metal—keeping pressure on global prices.

Has the Market Reached Peak Oversupply?

Some market participants argue that cobalt hydroxide oversupply may have peaked. The shift toward lithium iron phosphate (LFP) battery chemistries, which do not require cobalt, has significantly reduced demand for nickel-cobalt-manganese (NCM) batteries. This shift has weighed on the need for cobalt sulfate and cobalt hydroxide.

Despite this, cobalt prices are unlikely to experience a significant recovery in 2025. This is because supply remains abundant, and demand remains fragile.

Conclusion

The Chinese cobalt market will remain under intense price pressure in 2025, as rising nickel and copper production keeps supply high while demand struggles to catch up. While some believe that cobalt hydroxide oversupply may have peaked, market fundamentals suggest that any price recovery will be slow and uncertain.