Cobalt prices have plummeted to under $30,000 per tonne, down from over triple that amount just years ago. As the world's largest consumer, China seeks to increase its strategic cobalt reserves amidst the price drop.

China announced it would buy a record 15,000 tonnes of cobalt on the market starting next month to bolster its strategic reserves. Beijing's decision comes as global supply surpluses drive prices down to around $27,000 per tonne on the London Metal Exchange, one of the lowest levels since 2019.

The cobalt market surplus reached a historic 14,200 tonnes in 2023 and is expected to hit 20,000 tonnes this year. China's significant purchases could drastically reduce the anticipated surplus. However, they may not be enough to spur a price increase. In a report issued earlier this month, the Cobalt Institute wrote: "Short-term surplus expectations will keep prices low, but as the deficit approaches, prices should rebound".

The supply surge is mainly driven by Chinese company CMOC, which surpassed Glencore in 2023 to become the world's largest cobalt producer. CMOC produced 55,526 tonnes in 2023 from two DRC mines and aims for 60,000 tonnes in 2024.