The moly oxide daily global spot price per pound is currently at $7.93/lb compared with $9.20 at yearend 2019 and $11.88 at yearend 2018, according to Platts. The moly price ranged from a low of $7.33/lb to a high of $9.10/lb during the second quarter of 2020. The moly price reached a low of $7.00/lb on July 20, 2020 and breached the $8 mark on August 14, 2020.
Beginning in 2020 through mid-February, moly prices rose to nearly $11/lb. Later in February 2020, prices pulled back to the $9-range and below $9 in mid-March upon the global economic slowdown. Moly rebounded to just above $9 at the end of April but weakened below $8 in mid-June and traded in the $7-range for approximately two months.
The moly price has declined from softened demand due to the global economic contraction caused by the COVID-19 pandemic and the weakness in oil and gas industry impacting molybdenum-strengthened steel consumption. The International Molybdenum Association (“IMOA”) recently reported that global moly consumption in the first quarter of 2020 at 123.6 million pounds, decreased 13% year over year. China, the largest user of moly in the world, consumed 40.3 million pounds, 18% less moly in the first quarter compared with a year ago.
The IMOA also reported that global production decreased 8% year over year to 139.2 million pounds in the first quarter of 2020. China, the largest producer of moly, saw a 6% decrease year over year to 47.7 million pounds of molybdenum output related to the shutdown. The IMOA figures translate to a first quarter surplus of 15.6 million pounds, equating to 13% of first quarter demand.
Stainless steel represents the largest use of moly, accounting for 21% of all moly consumption, according to the CPM Group (“CPM”). The International Stainless Steel Federation (“ISSF”) reported an 8% drop year-over-year in global stainless steel output for the first quarter of 2020. The widespread business and industry shutdown around the globe to curb the coronavirus spread resulted in stainless steel production declines in all regions, including the largest stainless steel manufacturer China with a 9% year-over-year decrease, an 11% drop in United States of America, and a 6% decline in Europe.
On a promising note, China appears to be rebounding quickly as its cities and provinces reopen from the lockdown to curb the coronavirus spread. China’s second quarter Gross Domestic Production showed a 3.2% increase year over year compared with a minus 6.8% contraction in the first quarter from the prior year, according to BMO Metals Brief. Furthermore, China’s industrial production was up 4.8% year over year in June, which was the third consecutive month of growth, reported BMO.
China, the largest producer of stainless steel in the world, has been ramping up stainless steel production over the second quarter, according to CPM. China showed just a 2.7% decrease year over year (“YOY”) for June 2020 in the three most popular types of stainless steel, series 200, 300, and 400, compared with the record monthly high of 2.4 million metric tons in August 2019, noted CPM. An additional positive factor for moly is that China also showed a 5.8% YOY production growth for 2Q 2020 in the series 300 stainless steel, which contains higher moly and nickel compared with series 200 steel, stated CPM.
Chart 1: Moly Weekly Spot Price (1/6/2011 – 8/14/2020)
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 2025p)
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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