Cobalt Market Dynamics: Demand, Supply, Equilibrium, and Projections

Abstract

This study investigated the global cobalt market, emphasizing the dynamics of supply and demand. A structural equation modeling exercise was conducted, incorporating variables including mining trends, automotive dynamics, environmental indicators, and the GDP of the Democratic Republic of Congo (DRC). The selected model contained the factors with expected signs and significance levels. It identified inelastic demand (-0.28) of price. Because global carbon dioxide emissions significantly support cobalt demand, possibly because of its vital role in green technologies. The coefficient of global carbon dioxide emissions was 3.95 in the demand equation. A positive inelastic supply response (0.38) for the price could be attributed to by-product characteristics of cobalt. Moreover, the total copper and nickel production and DRC's GDP shows a positive correlation with cobalt production. To forecast 2030 cobalt market, low, medium, and high growth scenarios were developed, based on historical data of the exogenous variables in the supply and demand equations. The equilibrium points varied with growth scenarios: low growth leads to a 40,532 USD/ton price and 189,207 tons of production, medium growth results in a 62,967 USD/ton price and 335,592 tons production, while high growth finds a 121,399 USD/ton price and a significant increase to 654,285 tons of production.