* Stocks of cobalt high due to 2017/2018 price surge
* Market tighter due to closure of Mutanda, but not undersupplied
By Pratima Desai
LONDON, Feb 7 (Reuters) - Subdued demand in China due to the coronavirus and large stocks of cobalt are expected to outweigh supply losses from Glencore's giant Mutanda mine in Central Africa and cap prices of the battery metal for some months.
Expecting a significantly tighter market and stronger demand in top consumer China, traders have pushed cobalt prices up nearly 10% to around $16 a lb or nearly $35,000 a tonne since the start of January.
But the spread of the virus in China, which dominates production of the batteries that power electric vehicles, has seen factories stay shut after the Lunar New Year holiday, cutting demand for cobalt chemicals.
"Our base case assumes that demand will be hit in the short term as the government takes action to contain the virus, putting pressure on cobalt prices in the short term," said CRU Group analyst Daniel Chen. "There could also be a raw material stock build as mine supply is located outside China."
Analysts and traders say cobalt stocks in Africa at between 15,000 and 20,000 tonnes are large enough to weigh on prices. They were accumulated during 2017 and 2018 when historically high prices stimulated supply.
More than 70% of the world's cobalt supplies estimated this year at around 135,000 tonnes come from the Democratic Republic of Congo, in the form of hydroxide which is easily converted into chemicals for rechargeable lithium-ion batteries.
Glencore's Mutanda mine in the Democratic Republic of Congo was shut last year. It produced 25,000 tonnes of metal last year or around 20% of the global total and is expected to be under care and maintenance for two years.
"The market is tighter because of Mutanda, but it's not undersupplied at the moment," said Benchmark Minerals' analyst Caspar Rawles. Benchmark Minerals expects to see cobalt market surpluses in 2020 to 2022.
Rawles said rising output from other DRC mines would partly offset cuts at Mutanda.
These include Eurasian Resources Group Metalkol RTR, ramping up since early last year and expected to produce an annualised 20,000 tonnes by the end of this year and the opening of the Deziwa mine expected to produce 8,000 this year.
Cobalt demand in China and prices are expected to pick up once the virus is under control, but the timing is uncertain and there are limits to what Chinese consumers will pay.
"The problem is when prices start moving beyond $20 a lb, Chinese consumers start feeling the squeeze on their margins. They won't be willing to pay those prices," Rawles said.
"But China's electric vehicle subsidies will help demand."
Beijing has been slowly rolling back a generous five-year subsidy programme for so-called new energy vehicles (NEVs), which began in 2016. But in January a government official said China will not make significant cuts this year.
Reporting by Pratima Desai; editing by David Evans