Steel Mills Buy the Dip, Ferromolybdenum Trading Volume Rises but Prices Remain Weak [SMM Molybdenum Daily Review]

SMM November 26 news:

This week, the molybdenum market was mainly under pressure. Spot transaction prices for molybdenum concentrate were weak. Ferromolybdenum steel tenders were relatively concentrated, but with divergent market trends, the price center for steel tenders shifted down significantly. So far, the domestic steel tender transaction center is around 230,000-232,000 yuan/mt. Upstream mines had limited sales, with some holding back from selling. However, with international molybdenum oxide in the doldrums, imported cargo impacted the domestic spot market. Additionally, poor profitability in the ferromolybdenum industry dragged down upstream molybdenum prices.

As of today, SMM 45% molybdenum concentrate closed at 3,620-3,650 yuan/mtu, down 50 yuan/mtu from the previous trading day. During the month, environmental protection and other factors led to production cuts at some molybdenum mines in the Luanchuan area. Domestic molybdenum concentrate production saw a slight decrease MoM. However, with overseas molybdenum concentrate imports remaining high and approaching year-end, some molybdenum concentrate mines' needs to realize cash increased, leading to an overall loose market circulation. Future mainstream mine sales still need monitoring.

As of today, SMM ferromolybdenum closed at 232,000-240,000 yuan/mt, down 3,500 yuan/mt from the previous trading day. Steel mills bought the dip, leading to active inquiry and transaction activity in the ferromolybdenum market. However, with loosening cost support and poor stainless steel market profitability, steel mills clearly drove down purchase prices. The market transaction center continued to weaken, with some afternoon steel mill tender prices pulling back to around 320,000 yuan/mt.

Short-term, the molybdenum market may remain in the doldrums, constrained by loosening cost support and weakening downstream demand expectations. The continued weakening of ferromolybdenum prices increases the risk of industry-wide losses. Some ferromolybdenum plants' willingness to sell decreased, with low industry operating rates, suggesting limited further downside room for prices. Medium and long-term, environmental protection in the Luanchuan area is expected to sustain production cuts at some mines. If the supply of molybdenum raw materials like overseas molybdenum concentrate decreases, molybdenum concentrate market supply may tighten, potentially leading to a market turnaround. Subsequent focus should be on tracking steel mill procurement dynamics, mine operating rates, and changes in the international molybdenum market.