During the first half of 2018, the moly price has maintained its double-digit price but it has been volatile, trading from a high of $13/lb on March 2, 2018 to a low of $10.60 on June 28, 2018. Since the end of the second quarter, the moly price has increased to over $12/lb.
Approximately 70% of molybdenum’s first use is for steel production as molybdenum is a premier alloy to strengthen steel and make it corrosion resistant. Demand has been strong for molybdenum due to increased steel containing molybdenum output, driven by a strengthening oil and gas industry. Worldwide oil drilling using specialty steel and high-strength tubular steel has increased 10% year-over-year in the first six months of 2018, according to the oil rig count by Baker Hughes, a GE Company.
In addition, global crude steel production increased 4.6% year-over-year in the first six months of 2018, according to the World Steel Association. China, which produces over half of the world’s steel, recorded a corresponding 6% increase.
On the molybdenum supply side, the CPM Group, a commodities research firm in New York, estimates that the molybdenum market will near equilibrium with a slight surplus in 2018. CPM projects that molybdenum will tip into deficit in 2019, which will be exacerbated in 2020 and 2021.
Figure 1: Molybdenum Weekly Spot Price (1/4/2007-8/12/2018)
2017 Moly Market
During 2017, molybdenum demand benefitted from increased global steel output driven by a strong rebound in oil and gas drilling, particularly in North America, as well as robust economic expansion in China, emerging markets, the U.S. and Europe.
The molybdenum price rose strongly in 2017. In the first half of 2017, molybdenum prices surged to at just under $9 per pound and then decreased to the $7-$8 range mid-2017. The molybdenum price rose strongly again in late 2017 and has continued to show strength to date in 2018. The global molybdenum oxide average weekly price on March 2, 2018 at $12.83 per pound is a 26 percent increase from the year-end 2017 weekly price of $10.15 and 90% higher than the year-end 2016 weekly price of $7.03, according to Platts. The current spot price over $12 per pound reflects a price level last seen in 2014.
General Moly believes the molybdenum market is in the early stages of an extended recovery and view the long-term outlook for our business positively, supported by limitations on long-term supplies of molybdenum, the requirements for molybdenum in the steel industry, and a recovery in the oil and gas industry. Future molybdenum prices are expected to be volatile and are likely to be influenced by demand from China and emerging markets, as well as the strength or weakness of the U.S. dollar, economic activity in the U.S. and other industrialized countries, the timing of the development of new supplies of molybdenum, and global production levels.
Uses and Demand
Figure 2: Molybdenum First Use
Source: CPM Group
Figure 3: Diverse End Uses of Moly
Figure 4: Global Consumption of Moly
Source: CPM Group, International Molybdenum Association
Figure 5: CPM Group Moly Base Case: World Supply and Demand (Annual, Projected through 2026p)
Source: CPM Group
Figure 6: Primary Mines Key to Fulfill Future Supply
Source: Raw Materials Data, International Molybdenum Association, World Bureau of Metal Statistics and CPM Group
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