PRN: Molybdenum Prices Set to Continue Recovery in 2017, After Late 2016 Hiatus - Roskill

17/mar/2017 10:00:36 PR Newswire Turismo Contatta l'autore

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Molybdenum Prices Set to Continue Recovery in 2017, After Late 2016 Hiatus - Roskill


LONDON, March 17, 2017 /PRNewswire/ --

The fall in molybdenum prices which persisted between the second half of 2014 through to the end of 2015, eventually reached a floor at the start of 2016. Ferromolybdenum prices increased from a low of US$6.14/lb Mo in January 2016 to a peak of US$9.39/lb Mo in June, driven by factors on both the supply and consumption sides of the market. Since mid-2016 molybdenum prices have fallen back, though remained at least 30% higher than at the start of 2016, supported by increased demand.

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The importance of China to the molybdenum industry has grown markedly over the past ten years, with Chinese domestic consumption increasing by 14.4%py over the period. China now accounts for 36% of global consumption, compared with below 12% in 2006, greater than the USA and EU consumption combined. In comparison, molybdenum consumption in the USA has contracted since 2006, caused by the overall decline in US domestic special steels production. In 2016, however, increased demand for molybdenum bearing steels from the oil and gas industry halted the decline in US molybdenum consumption.

Recovery in oil and gas prices saw demand for oil country tubular goods return  

The recovery in oil and gas prices in the first half of 2016, and associated increase in active drill rigs, supported molybdenum demand as greater volumes of oil country tubular goods and equipment used in refining were required. The increase in active drill rigs was centred on the North American industry, which has acted as a swing producer when oil prices have exceeded production costs. The Baker Hughes rig count showed an 87% increase in active rigs in the USA and Canada between May and December 2016, though the global total only increased by 26% over the same period as a result of falling production in the Middle East and South America. Further growth in consumption from oil and gas applications is expected in 2017 as the recovery in production from North America continues.

Continued urbanisation and growth in the middle class in developed economies has increased consumption of stainless steel in consumer products and construction, particularly in China where per-capita consumption has increased as the economy becomes more developed and service-based. Global consumption of molybdenum in stainless steels increased 7.7% in 2016 as steel mills restocked and demand is forecast to increase by over 2% in 2017.

Cut-backs by major producers eroded by higher prices  

The price recovery was also supported by cut backs in production by major molybdenum producers. Freeport McMoran reduced production by 14% in 2016, largely from the Climax and Henderson primary molybdenum mines in the USA. Nine major Chinese producers planned to cut molybdenum production by 10% in 2016, though the increase in prices throughout the first half of 2016 caused all but three of the companies to renege on these plans. By-product molybdenum producers increased the share of global production to over 70% of for the first time in 2016, as many primary operations had suspended or curtailed production amidst lower prices. By-product molybdenum operations in Chile increased output, with production from CODELCO in Chile increasing by 12%, though the majority of by-product operations in the Americas also curtailed molybdenum output.

Positive outlook for prices in 2017 

Molybdenum prices fell back towards the end of 2016, though prices began to show positive movements in December 2016 and early 2017. Ferromolybdenum prices increased by 3.4% in December 2016, which was followed by a further increase of 1.5% in January and February 2017. Price increases are forecast to continue in 2017, as demand from the steel industry continues to increase and supply from some producers remains disrupted. The release of stockpiled material could slow the rate of any increase in prices, though it is unlikely the release of any stockpiled material will cause prices to fall significantly or for a prolonged period. The supply demand balance is forecast to remain tight in 2017, supporting ferromolybdenum prices of between US$9.00-US$11.00/lb Mo in 2017.

Beyond 2017, the introduction of new primary and by-product operations and increased output from existing producers will be required to keep pace with strong growth in molybdenum demand from special steel and chemical applications. This is expected to support further price increases, though stronger prices are expected to support increased output from 'swing' primary molybdenum producers which will slow price rises beyond 2019.

Roskill has released its new molybdenum market report with forecasts out to 2026. It is essential reading for anyone requiring a comprehensive overview of this sector. 

Molybdenum: Global Industry, Markets & Outlook to 2026, 13th Edition is now available from Roskill Information Services Ltd, 54 Russell Road, London SW19 1QL UK. Click here to download the brochure and sample pages.


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