Mainstream Mine Auction Prices Surge at High Levels, Molybdenum Market Advances at High Levels [SMM Molybdenum Analysis]

SMM July 15:

Today, major domestic mines launched centralized public auction sales of molybdenum concentrates. Multiple rounds transacted entirely at premiums, with futures prices rising steadily and transaction performance outstanding, breaking the traditional weak pattern of the off-season and exhibiting a typical strong rally in the off-season and tight spot supply dynamic. In terms of specific transaction details, a large mine in Luoyang sold 810 mt of molybdenum concentrates through auction. The auction floor price was 5,260 yuan/mtu, and all were eventually transacted, with transaction prices in the range of 5,305-5,390 yuan/mtu and a weighted average transaction price of about 5,334 yuan/mtu. Meanwhile, a large mine in Jiangxi offered 256 mt of 45%-50% grade molybdenum concentrates through listing sale, with excellent impurity indicators (average copper 1.95%, average phosphorus 0.081%). It also pegged the auction floor price at 5,260 yuan/mtu and eventually transacted at 5,320 yuan/mtu. The transaction price center for domestic molybdenum concentrates shifted sharply higher. As of the morning of July 15, SMM 45% molybdenum concentrates closed at 5,300-5,330 yuan/mtu, up 30 yuan/mtu from yesterday and 36.8% higher than the beginning of the year. Overall, auction premiums were stable, and cargoes moved quickly, fully reflecting active just-in-time procurement from downstream, scarce low-priced cargoes in the market, and strong buying sentiment in the market.

The strong and firm molybdenum prices were primarily driven by the continuously intensifying tight supply-demand balance pattern . Supply side, domestic molybdenum ore mining was constrained by environmental protection inspections and strict mining quotas, the release of incremental production from mines was limited, and no new large capacity came online. Spot circulating supply was tight, traders and mines generally held back from selling, and low-priced cargoes nearly disappeared. Outside China, grade declines in major producing mines and ongoing geopolitical and labor issues disrupted supply, leading to a contraction in global molybdenum supply, which further supported the resilience of domestic spot prices. Molybdenum concentrate prices outside China consolidated at highs, and international molybdenum oxide prices consolidated at highs at $31.7/lb. China's import window was closed, which to some extent boosted the domestic raw material spot market.

Demand side support also rose simultaneously, with upstream and downstream prices strengthening in tandem. Molybdenum concentrates and ferromolybdenum both rose simultaneously , and the prosperity of the entire industry chain warmed up comprehensively. Quotations for the key downstream product ferromolybdenum rose again today, with mainstream domestic spot quotations concentrated at 330,000-338,000 yuan/mt . Manufacturers' offers generally raised to above 335,000 yuan/mt. Steel mill tender prices rose steadily, with recent transaction prices in steel mill tenders maintained at high levels of 328,500-329,000 yuan/mt, and just-in-time procurement was solidly implemented. Currently, the low-priced stockpiled inventory at downstream steel mills and molybdenum smelters had been largely depleted, and the pace of restocking continued to accelerate. The high-priced transactions of molybdenum concentrates were synchronously transmitted to the ferromolybdenum segment, supported by strong smelting costs. Coupled with the approaching traditional peak season for stainless steel and special steel in Q3, sentiment for early stockpiling by end-users heated up, fully accepting the high prices of upstream concentrates without any rejection of high prices or sluggish transactions. The two-way positive factors from both upstream and downstream laid a solid foundation for the price increase. As of today, SMM ferromolybdenum closed at 334,500 yuan/mt, up 2,500 yuan/mt from yesterday, with a year-to-date increase of 30.4%, a gain smaller than that in the molybdenum concentrates raw material market. Based on current transaction prices from steel mill tenders, the industry remained in a severe price inversion.

Overall, the molybdenum industry chain will sustain a pattern where concentrates and ferromolybdenum both remain strong and consolidate at high levels on a firm note. Upstream mine spot supply was tight, with sentiment holding back from selling unchanged, making high-premium deals for concentrates commonplace; downstream ferromolybdenum was supported dually by rising costs and rigid demand underpinned by steel mills, with ample price resilience. Absent negative shocks from macro or policy fronts, both products are expected to remain firm at high levels in the near term, and as end-user restocking picks up, there is still some upside room