SMM News on June 6:
As June begins, the molybdenum market continues to attract significant attention. Early in the month, the bidding prices for molybdenum concentrate from mainstream mines have gradually been finalized, with ore prices maintaining a high-level upward trend. On June 4, a mine in Jiangxi province conducted a tender sale of molybdenum concentrate with a grade of 45%-50%, achieving a transaction price of 3,865 yuan/mtu. Additionally, on June 6, another mine in Henan province conducted an offline sale of molybdenum concentrate with a grade of 50% and above, achieving a transaction price of 3,870 yuan/mtu. As of June 6, SMM reported that molybdenum concentrate prices closed at 3,860-3,890 yuan/mtu, with an average price of 3,875 yuan/mtu, marking an increase of approximately 7% from the beginning of the year and reaching a new high since February 2023. Downstream ferromolybdenum (Mo60) prices closed at 245,000-250,000 yuan/mt, with an average price of 247,500 yuan/mt, showing an increase of approximately 6% from the beginning of the year. The high prices in the upstream sector have been transmitted downstream, leading to a recent upward shift in the price center of gravity for molybdenum metals and molybdenum chemical products.
SMM believes that the confluence of multiple favorable factors has driven the strong upward trend in molybdenum industry chain prices.
I. Scarcity of Mine Resources Coexists with Capacity Constraints
In 2024, the overall growth in molybdenum concentrate production slowed down, with the main increase coming from low-grade ores, while the overall growth in standard-grade ores also decelerated. Meanwhile, the production of molybdenum concentrate from leading mines has decreased to varying degrees compared to previous periods, with some leading mines experiencing significant production declines in 2024, further driving up the demand for market-available ores. According to SMM data, domestic molybdenum concentrate production in 2024 was approximately 223,000 mt, representing a year-on-year decrease of 0.9%. Entering 2025, the release of molybdenum concentrate production has been limited, and a decline in grade is a prevalent issue in the industry. SMM data indicates that domestic molybdenum concentrate production from January to May 2025 was approximately 87,700 mt, showing a year-on-year increase of approximately 7%. Among them, molybdenum concentrate production in May decreased slightly on a month-on-month basis. The limited capacity release and declining grade of molybdenum mines in the raw material sector have resulted in a "hard gap" in raw material supply, providing strong support for molybdenum prices.
II. Dual Demand Drivers from Traditional and Emerging Sectors
Molybdenum, known for its high strength, high melting point, corrosion resistance, and wear resistance, is widely used in various industries, including steel, petroleum, chemicals, electrical and electronic technology, pharmaceuticals, and agriculture. Approximately 80% of molybdenum's direct consumption is in the form of roasted molybdenum concentrate or ferromolybdenum and other molybdenum furnace charges in the steel industry, with the remainder being used in molybdenum chemicals and molybdenum metal products. In recent years, driven by accelerated global investments in energy, nuclear power construction, petrochemicals, and infrastructure, demand has grown in sectors such as pipelines, storage tanks, reactors, seawater desalination equipment, shipbuilding, nuclear power, and new energy, propelling a steady annual increase in domestic molybdenum-based stainless steel production with notable growth rates. According to SMM data, domestic production of stainless steel 316/316L in China from January to May 2025 was approximately 1.172 million mt, up 96% YoY. The growth in demand for molybdenum-containing stainless steel significantly drove up the demand for products such as ferromolybdenum. According to SMM's estimates, the average monthly tender volume for ferromolybdenum in steel mills from January to May reached 13,000 mt. In June, multiple steel mills in Jiangsu and Hebei provinces released tender volumes, and the center of gravity for ferromolybdenum transactions also shifted upward.
III. Driven by Industry Policy Factors
In February 2025, the Ministry of Commerce imposed export controls on strategic metals such as tungsten and molybdenum. In early June, multiple departments jointly deployed measures to strictly prevent the illegal outflow of strategic minerals, with resource-rich provinces like Guizhou taking the lead in responding. These policies aim to safeguard national security, and this series of measures has intensified expectations of a tight global molybdenum supply. The export control policy restricts the outflow of molybdenum-related products, leading to a relatively concentrated supply in the domestic market, enhancing the domestic market's control over molybdenum prices, and driving up global molybdenum industry prices.
SMM Commentary: Driven by multiple positive factors such as supply and demand dynamics and policy influences, the molybdenum market has shown a rapid upward trend. In the short term, the molybdenum market is still experiencing a temporary undersupply situation due to tight raw material supply, rising bullish expectations, and downstream just-in-time procurement, supporting the molybdenum market to fluctuate at highs. However, in the medium and long term, since April, prices of products such as ferromolybdenum have continued to rise, leading to poor steel mill profits in the downstream sector. In May, some stainless steel mills have already reduced production, and as steel mill production gradually enters the traditional off-season, the accumulating downstream pressure may constrain the market's growth potential. Follow-up attention should still be paid to changes in mine operations and downstream demand.
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