From a supply and demand perspective, downstream products are expected to face shortages in Q1 2026, with profit margins for cobalt chloride and Co3O4 likely to expand. In Q2, prices of cobalt intermediates are projected to rise driven by demand. In H2, the industry will achieve supply and demand rebalancing, leading to a slowdown in the growth rate of cobalt market prices. As electrolytic cobalt inventories continue to decline, the pricing relationship between electrolytic cobalt and cobalt intermediates is expected to gradually shift from a discount to a premium. Meanwhile, cobalt sulfate, due to its relatively smaller impact from raw material supply constraints and the presence of inventories among downstream ternary battery cell manufacturers, is likely to experience weaker price increases and profit margins compared to cobalt chloride in 2026.
I. Supply Review and Outlook
In March 2025, the Democratic Republic of Congo (DRC) imposed a ban on cobalt exports, leading to a significant reduction in cobalt raw material supply to China. From March to October, domestic port arrivals primarily consisted of in-transit inventory and returns from South African port stockpiles. On September 21, 2025, the DRC announced the lifting of the cobalt export ban and implemented a quota-based export system effective October 15, with specific enterprise quotas detailed on October 12. However, after exports resumed on October 16, the DRC failed to promptly issue export licenses. As of early December, the approval process for October export quotas remained incomplete, resulting in no raw materials leaving the DRC. Cobalt intermediates arrivals in China from January to March 2026 are expected to remain weak, with concentrated arrivals anticipated in April and May, followed by a gradual return to average monthly quota levels.
In terms of import sources, China's cobalt intermediate import structure has remained relatively stable over the past five years, with over 97% of raw materials sourced from the DRC, ranking first, followed by Russia, the Philippines, Indonesia, and Zambia.
MHP imports grew steadily from 2021 to 2025, with an average annual increase of 60%. In 2025, MHP imports reached 1.8749 million tonnes, up 31% year-on-year. Regarding trading partners, the launch of projects in Indonesia contributed significantly to the increase in nickel hydrometallurgy intermediate imports, with Chinese players initiating eight new intermediate projects in Indonesia in 2025.
Cobalt sulfate production in 2025 amounted to 111,611 tonnes, a year-on-year decrease of 5.8%. The overall supply of cobalt sulfate declined in 2025, primarily due to structural shifts in the technical pathways for power batteries in the global electric vehicle industry.
Cobalt chloride production in 2025 reached 96,079 tonnes, down 14.6% YoY. While demand for cobalt chloride's downstream product, Co3O4, grew steadily in 2025, cobalt chloride demand from electrolytic cobalt weakened as smelters gradually reduced or halted production due to high production costs. Concurrently, Co3O4 producers remained cautious in procurement, focusing on inventory consumption and essential restocking. Additionally, the proportion of Co3O4 produced via sulfate-based processes increased, limiting the actual incremental demand for cobalt chloride.
II. Review and Outlook of End-Consumer Demand
In 2025, China's EV sales reached 16.49 million units, representing a year-on-year increase of 28.2%, though the annual growth rate moderated compared to previous years. The year 2026 will mark a "transitional first year" for EV policies, shifting from "universal subsidies" to "structural regulation." As policy-driven incentives wane, the growth of the EV market in 2026 will depend on two core drivers. In detail, the ongoing transition from internal combustion engine vehicles to electric vehicles domestically and accelerated exports under improved trade conditions. Competition in the EV market will move away from "inward price competition" toward value-based competition centered on product strength. Consumer purchasing decisions will evolve from being "subsidy-driven" to "experience-driven," with factors such as smart cabins, reliable range, and after-sales service becoming key considerations.
The growth in domestic power battery installation serves as a key indicator for the development of China's EV industry. Data from the China Automotive Power Battery Innovation Alliance shows that from January to December 2025, the cumulative installed capacity of China's power batteries reached 769.7 GWh, a year-on-year increase of 40.4%. Among these, ternary batteries accounted for 144.1 GWh, or 18.7% of the total installed capacity, with a year-on-year increase of 3.7%. In 2026, more ultra-fast charging battery products and new EV models are expected to be introduced. The power battery industry will transition from focusing on scale expansion to an era driven by technological iteration and global competition.
In 2025, with the continuous upgrades of smartphones, tablets, laptops, and other devices, lithium cobalt oxide (LCO) batteries maintained their dominance in mid-to-high-end 3C electronic products due to their high energy density. The rapid rollout of 5G technology has imposed higher performance demands and faster response requirements on smart devices. This has further elevated the need for batteries with greater energy density and stability, making LCO batteries an ideal choice due to their superior performance. The widespread adoption of 5G technology has not only driven demand for LCO batteries in traditional devices such as smartphones but has also fostered new application scenarios, such as IoT devices and smart home systems, further expanding the market demand for LCO.
III. Conclusion:
From a supply and demand perspective, downstream products are expected to face shortages in Q1 2026, with profit margins for cobalt chloride and Co3O4 likely to expand. In Q2, prices of cobalt intermediates are projected to rise driven by demand. In H2, the industry will achieve supply and demand rebalancing, leading to a slowdown in the growth rate of cobalt market prices. As electrolytic cobalt inventories continue to decline, the pricing relationship between electrolytic cobalt and cobalt intermediates is expected to gradually shift from a discount to a premium. Meanwhile, cobalt sulfate, due to its relatively smaller impact from raw material supply constraints and the presence of inventories among downstream ternary battery cell manufacturers, is likely to experience weaker price increases and profit margins compared to cobalt chloride in 2026.