Lower concentrate feedstock availability and a rise in demand from steelmakers is expected to support the molybdenum market in 2022, according to Li Shan, general manager of SinoMoly, a subsidiary of Jinduicheng Molybdenum.
Output from global key mining companies is expected to fall in 2022 because of lower metal grade in copper and molybdenum ore, harsh weather and a lack of workforce, Li told delegates at the 13th Luoyang Tungsten and Molybdenum Conference.
Global supplies will not increase owing to delays to new production projects. China will continue to carry out energy consumption curbs and environmental restrictions next year, which will offset steady output plans at domestic mines to leave a slight supply shortage.
Global demand for crude steel is forecast to reach around 1,896mn t in 2022, up by 2.2pc from 2021, including a rise of 5.5-7.1pc in Europe, Li said.
Renewed demand from other emerging downstream sectors, such as hydrogen energy, will indirectly support the molybdenum market in the coming year. The main steel product that involves molybdenum is 316L, which is used in the processes of hydrogen production, storage and usage.
Prices for molybdenum have held firm following a recovery in demand from steel sectors after the Covid-19 pandemic eased. Market participants expect global annual consumption in major economies in 2021 will be stronger than 2020. Purchases of ferro-molybdenum alloy from Chinese steelmakers in the first 10 months of this year rose by around 8pc to 9,500 t/month from a year ago.
Chinese prices started falling in September following consecutive gains during January-August, with steelmakers reluctant to purchase at higher prices in view of thin profit margins, especially when energy consumption curbs pressured the production and market activity of stainless steel. Molybdenum suppliers then cut their prices to attract sales.
The country exported 13,299t of ferro-molybdenum in January-October, up by 284pc from 3,462t over the same period of last year, official customs data show. Exports reached 1,851t in October, up by 343pc from 418t a year earlier and up by 3.70pc from 1,785t a month ago. Alloy suppliers also increased their shipments to overseas buyers in November.
Argus today assessed domestic prices for 60pc grade ferro-molybdenum at 138,000-142,000 yuan/t ex-works, or Yn230-237/kg ($36.10-37.19/kg) for contained molybdenum, up from the 30 November assessment of Yn135,000-138,000/t. Export prices remained stable from 30 November at $37-38/kg fob today.
Steelmakers have increased their replenishment efforts as the country's energy consumption curbs have eased and concentrate suppliers have held low inventories in recent weeks after concluding large volumes of deals at lower prices in November. Alloy prices are expected to hold firm in the short term in light of the increased purchases from steelmakers and tight concentrate feedstock availability, market participants said on the sidelines of the conference.
