Lithium, cobalt markets cautious on China’s demand

LME Week, an annual gathering of the metals industry, took place in Mayfair, London, over October 19-23.

Prices of both battery metals edged down in recent months from peak levels reported in spring, with demand from the consumer electronics sector weighing on the cobalt market and demand from energy storage systems (ESS) pressing on lithium prices.

Cobalt market awaits potential DRC, Indonesia supply interventions

The largest cobalt-supplying country, the Democratic Republic of Congo (DRC), is maintaining the cobalt export quota system until the end of 2027.

Yet cobalt market sentiment has remained bearish – mainly on weaker demand signals from China, the key refining hub for cobalt metal and battery chemicals, as well as larger-than-expected alternative supply for cobalt units.

Among the key topics discussed in London were a potential export quota tightening from the DRC, changes to Indonesia’s output of mixed hydroxide precipitate (MHP), the expected availability of recycled cobalt units, and signals of potential demand recovery in China.

Fastmarkets’ daily price assessment for cobalt hydroxide 30% Co min, cif China was $13.00-14.00 per lb on Tuesday October 27, down from $14.25-15.00 per lb from the day before and sharply below a 2026 peak of $26.00-26.25 per lb on April 27.

It remains unclear at which price level the DRC regulator, the Authority for the Regulation and Control of Strategic Mineral Substances Markets (ARECOMS), may intervene.

ARECOMS is taking into consideration the recent “challenge with the prices” of cobalt hydroxide, according to Eric Kalala, chief executive officer of state-owned Entreprise Générale du Cobalt (EGC), who was speaking at the FT Metals and Mining summit on October 15.

There was a concern in the market that another supply-restricting measure may come from Indonesia, the second-largest cobalt miner. 

According to media reports, some large nickel-cobalt producers were in talks about capacity cuts at their high-pressure acid leaching (HPAL) facilities. Indonesia’s HPAL plants have recently faced limited availability of sulfuric acid and water scarcity, adding pressure on their production costs.

The companies did not confirm the production cuts, yet that impacted the market sentiment. 

Market participants also expected cobalt units from black mass, lithium-ion battery recycling feedstock, to ease in 2027 after higher-than-expected supply in 2026. That supply was incentivized by recently higher cobalt prices, as recyclers processed long-held black mass stocks that were not profitable to consume at 2024 and 2025 price levels.

The global secondary cobalt supply is estimated to reach 36,000 tonnes in 2026, with China’s secondary cobalt supply accounting for 27,000 tonnes of that volume, Fastmarkets battery analyst Andre Cortesão said.

Compared with 2025, those figures rose by approximately 25% based on the improved availability of recyclable supply.

Yet the recycling industry is struggling with high production costs and decreasing demand, market participants said.

In China, declining demand for consumer electronics such as smartphones and laptops, which use lithium-cobalt oxide batteries, has been weighing on market sentiment since the summer.

A potential signal to monitor, according to one sellside source, is the replacement rate in the consumer electronics sector; the source was hoping for those to pick up in 2027.

Another signal is the supply of microchips for AI and consumer electronics – demand for those from the AI sector has left less material available for laptops and smartphones.

Some market participants have been expecting additional microchip production capacity to come online in China in 2027, easing that bottleneck.

Lithium price volatility set to persist; Argentine supply remains key focus

Discussions during LME Week centered on the recent downturn in lithium prices and the difficulty buyers and sellers were facing in establishing a new price level at which both sides were willing to transact.

Weakness in China’s domestic lithium market, driven by concerns over downstream demand next year, particularly from the ESS sector, weighed on sentiment across the supply chain.

“There is a gap between buyers and sellers [price] ideas, which isn’t unusual after a big move on GFEX [the lithium carbonate futures contract on China’s Guangzhou Futures Exchange]. I’m not going to sell now [because] I think there is still upside [to prices],” a lithium trader said.

The disconnect between seller and buyer price ideas contributed to subdued spot activity in both China and the cif China, Japan and Korea (CJK) market over LME Week. Refiners were largely purchasing spodumene on a hand-to-mouth basis, while lithium consumers continued to work through inventories.

Fastmarkets’ daily assessment of lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea was $12.80-15.00 per kg on Tuesday October 27 — down sharply from a 2026 high of $24.50-25.80 per kg on May 11.

Expectations of additional spodumene supply from Africa added to buyers’ caution, despite logistical bottlenecks delaying shipments from Zimbabwe via Mozambique’s Port of Beira.

Market participants expected accumulated inventories to eventually reach China, reducing the urgency for refiners to replenish stocks.

“The industry is young, it’s immature, it’s highly volatile – any participant has to set themselves up to navigate that,” Dale Henderson, chief executive officer of Australian spodumene miner PLS, said during a panel discussion at the Argentina Day event at LME Week on Tuesday October 20.

Argentina is expected to remain a key driver of lithium supply growth in the coming years, supported by its Large Investment Incentive Regime (RIGI), an incentive program for large-scale investments.

Annual lithium production capacity in Argentina is expected to reach around 275,000 tonnes on a lithium carbonate equivalent (LCE) basis by the end of 2026, Secretary of Mining Luis Lucero said at the event.

Following feedback from the industry and policymakers seeking greater transparency for prices on a free on board (FOB) South America basis, Fastmarkets is proposing to launch a suite of eight calculated lithium carbonate and lithium hydroxide prices basis Buenos Aires and Antofagasta ports, effective Tuesday December 15.