Molybdenum prices in China jump to 17-year high on supply shortage

Global prices for molybdenum are near record highs as new supplies cannot meet rising demand for molybdenum-containing steel.

China's molybdenum concentrates and ferromolybdenum prices rose to their highest levels in 17 years at the end of January, according to Henan-based pricing information provider Molychina.com. Prices hit an all-time high in May 2005, when molybdenum mines shut down due to fatal accidents in Liaoning province.

The Platts Daily Dealer Molybdenum Oxide price has climbed 18% so far this year to $38/lb-$39/lb on Feb. 2, according to S&P Global Commodity Insights, the highest since the assessment launched in 2011.

Global molybdenum supplies have turned to a deficit since 2021 due to a lack of new projects and rising demand, especially for molybdenum-containing steel used in oil and gas pipelines, wind turbines, solar panels and military applications, a Beijing-based molybdenum analyst told Commodity Insights.

Protests in Peru, a major molybdenum producer, have further boosted bullish sentiment since the beginning of 2023, the analyst said.

China, the world's biggest molybdenum market, produced around 38% of global molybdenum in 2021 and consumed around 45%, according to the International Molybdenum Association.

In 2021, about 55% of molybdenum demand was used for constructional steel, tool and high-speed steel, and cast iron, while about 24% was used to make molybdenum-grade stainless steel, according to the group.

A supply shortage is likely to push molybdenum prices higher in the next two years.

Global production capacity growth is expected to be very small from 2023 to 2025, Huatai Securities said in a Jan. 13 note, and major companies in China have no plans to expand production. Supply from new projects outside of China will be offset by copper mine output reductions and falling grades of molybdenum, Huatai said.

However, global molybdenum demand is projected to grow at an annual compounded rate of 3.1% from 2022 to 2025, driven by construction and alloy steels, according to Huatai. The investment house expects a deficit of 343,000 tonnes, or 11.1% of total consumption, in 2025.

As of Feb. 2, US$1 was equivalent to 6.73 Chinese yuan.

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