LONDON- Transport delays from South Africa against a backdrop of increasingly robust Chinese demand have fuelled a price rally for cobalt hydroxide, used to make chemicals for electric vehicle batteries.

Chinese cobalt refiners have moved to replenish stocks of hydroxide feedstock as they gear up for a rebound in demand as coronavirus lockdowns are eased.

But COVID-19 lockdowns in southern Africa have created bottlenecks, delaying cobalt shipments from Zambia and the Democratic Republic of Congo, which accounts for over 70% of global supply.

"We are seeing a scramble for cobalt hydroxide in China, (but) buyers are finding it isn't there," said Benchmark Mineral Intelligence's (BMI) head of price assessment Caspar Rawles.

Cobalt from Congo comes in the form of hydroxide which is converted into chemicals for the lithium-ion batteries used in electric vehicles, mobile phones and the aerospace industry.

Cobalt hydroxide prices are typically a percentage of the metal price, known as a payable. According to an assessment by BMI, payables hit levels around 75% in July, their highest in two years, from around 67% last month.

Traders said payables had risen even further, to around 85% currently.

China dominates the supply chain for electric vehicle batteries, makers of which are struggling to source cobalt products.

Cobalt prices CBD0 on the London Metal Exchange are at $33,000 a tonne, the highest since early March and up more than 15% since the end of July, when the price slide due to stalled activity and COVID-19 lockdowns came to an end.

However, surpluses are still expected this year, with CRU Group's George Heppel putting the number at 6,000 tonnes while BMI forecasts an oversupply of around 5,000 tonnes.

The September cobalt contract on the Wuxi Stainless Steel Electronic Trading Center WUXICOBMU0 - a reference for spot deals in China - is up 20.6% since the end of June at 286 yuan ($40.95) a kilo.

($1 = 6.9838 Chinese yuan renminbi)

(Reporting by Zandi Shabalala in London, additional reporting by Tom Daly in Beijing; Editing by Pratima Desai and Jan Harvey) ((zandi.shabalala@tr.co mailto:zandi.shabalala@tr.comm))