A robust Chinese domestic market is currently the only factor supporting molybdenum spot prices, with the European market failing to register any uptick in September since the return from the summer holidays.
In particular, European stainless steel mills have been facing headwinds from high interest rates and energy costs and weak underlying steel demand, meaning mills are refraining from the molybdenum spot market for now.
While molybdenum production from mines in Chile and Peru has been largely lower than expected this year, no significant change in market fundamentals is expected over the rest of 2024, with the Chinese market expected to remain solid — although some are questioning how long it can continue to support spot prices given the uncertainty around its construction sector.
Trading activity this year to date has been somewhat slow. In contrast to 2023’s high volatility, molybdenum oxide powder spot prices have found relative stability in 2024 amid weaker global demand, especially in Europe.
Oxide prices hit their lowest this year on 1 February at $19.175/lb Mo and a high on 14 June at $24.125/lb Mo. In 2023, the high for moly oxide powder was $40/lb Mo.
For much of the first four month of this year spot prices moved little, although in late April there was a spike as tightness in molybdenum concentrate supply in the Chinese domestic market sparked fears of a supply shortage. The result of a tender from Long Yu Molybdenum Industry at RMB3,750-3,800/metric ton unit ($518-$525/mtu) on 23 April was the immediate catalyst for the rise in the global spot price by as much as $1/lb Mo overnight. Concentrate prices heard by S&P Global Commodity Insights in mid–September ranged between RMB3,760/mtu for 45%-50% Mo content, to RMB3,795/mtu for 50% Mo content.
Traded volumes recorded by S&P Global Commodity Insights so far this year show the global moly oxide powder market has remained heavily Asia focused, with 78% of tracked volumes being reported basis in-warehouse Busan, Tianjin, or CIF Japan.
China’s relatively buoyant steel production this year continues to be the main factor pulling global trade volumes to-wards Asia. This pull has regularly narrowed the spread be-tween the Chinese import window for molybdenum products and the global molybdenum oxide powder spot price.
At the time of writing, the import price range to China was estimated at $21.40-$21.50/lb Mo by S&P Global Commodity Insights, close to the latest price assessment on 16 September at $21.475/lb Mo.
By contrast, so far this year just 2,850 metric tons were heard traded in Europe, which over the past decade or so has seen its stainless steel industry diminish in global importance. Last year Europe accounted for just 10% of global production, falling from nearly a quarter in 2010, according to industry association Eurofer.
Among smaller markets, developments in India will be of interest over the coming months after it scrapped a 2.5% import duty on molybdenum products in July, a move welcomed by the market. So far this year just 244 mt of deals have been reported to S&P Global Commodity Insights, rep-resenting around 2% of the total volume captured. Market participants will be watching for a potential pick-up in spot trade volumes, although opinions on whether it could spark the rise of another regional trading hub remain mixed. So far, Indian spot activity has remained sporadic.
As with molybdenum oxide powder, ferromolybdenum trade remains largely focused on China and Asia, with large tenders reported during the year. Market source pointed to stronger than expected Chinese FeMo consumption, despite uncertainty caused by major construction companies in the country having run into financial difficulties. According to a market source, overall consumption of ferromolybdenum in China for the month of August was around 13,000 metric tons, holding steady with July’s consumption.
Comparatively, the European ferromolybdenum market has weakened over the course of 2024. Fading profit margins due to a decoupling of moly oxide powder spot prices and actual FeMo spot, as well as high energy costs pressuring converters, and weaker demand from end-consumers have weighed across the whole market. Traders have turned to the spot market solely based on need, and both sellers and buyers were reportedly running low inventories, leaving spot prices particularly sensitive to market movements.
Overall since 2 January 2024, global moly oxide powder spot prices assessed by S&P Global Commodity Insights increased by 8.28%, while European ferromolybdenum spot prices rose by 4.74% over the same period.
“It is not unusual to witness a lag between ferromolybdenum and moly oxide powder spot prices when one or the other experience high volatility, but this cannot last forever,” a selling source told S&P Commodity Insights in June, after moly oxide powder rose 16.3% and ferromolybdenum 13.3%. Overall, FeMo conversion costs (see below) have mainly been marginally positive, apart from through June and July.
By Téo Ngoma, Associate Editor
S & P Global Commodity Insights
