[minutes] when will the domestic molybdenum market "peak season is not prosperous" usher in a rebound?

SMM11 March 26: in the online market live conference hosted by SMM, SMM analyst Shi Zhenwei published the domestic molybdenum market "peak season is not prosperous" when will usher in a rebound as the theme of the special live broadcast, the meeting first carried out the third quarter of the domestic molybdenum market and supply and demand pattern analysis, and then introduced in addition to the reduction of steel plant orders led to price decline factors, and finally when the domestic molybdenum city warmed up was analyzed.

Analysis of Q3 domestic molybdenum market market and supply and demand pattern

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Domestic molybdenum prices are "unusual" in the peak season in September, showing a marked decline. Up to now, prices have fallen 23% from this year's high, and the peak season is not prosperous. There was a significant rebound in mid-November in previous years, but this year is still in the downward channel, market sentiment is slightly pessimistic. The main reason for this is still the demand problem.

Since September this year, domestic steel production has declined significantly under the influence of the double-limit policy, and output has been stable or even increased in previous years. Taking stainless steel as an example, the output of stainless steel decreased by 21% in September compared with August. Molybdenum market improved early this year, steel volume are higher than previous levels, but there has been a significant decline since September, falling below 2020 in October.

Resume production after the Spring Festival holiday, replenish the stock of raw materials, April and May is the resumption of production in stainless steel plants after the year, there is a "small outbreak" of demand, the stainless steel industry will usher in the full-year peak season in August and September.

Since September, there has been a continuous oversupply of ferromolybdenum in China, and the supply of ferromolybdenum has also declined due to the continuous environmental protection inspection in Liaoning area, multi-land power restriction and the initiative of enterprises to reduce the operating rate. The production of ferromolybdenum was also reduced under the influence of the policy, but the consumption of ferromolybdenum decreased significantly more than that of ferromolybdenum. Compared with August and October, the output of ferromolybdenum decreased by 2130 tons and consumption decreased by nearly 10,000 tons.

The reasons for the decline of ferromolybdenum price

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Production restrictions of steel mills in some areas recovered in November, although the overall demand in November is still not as good as the previous peak season, but the demand has obviously recovered to a certain extent.

From the point of view of weekly steel recruitment, except for a sharp increase in the impact of post-holiday replenishment in the second week of October, steel recruitment has been in a state of recovery since the second half of October, but prices have bucked the trend.

November so far steel recruitment, as a number of steel mills have entered the bidding plan at the end of the month, the market generally predicted that the total steel recruitment in November is expected to exceed 10,000.

The recovery of foreign economy has stimulated the growth of stainless steel export orders, and domestic stainless steel production has continued to increase. In the first half of the year, domestic output of 300 series stainless steel was 9.73 million tons, an increase of 48 percent over the same period

The end of raw materials is burdened with storage, and prices fall, driving the ferromolybdenum market down. The inventory of molybdenum concentrate has been in a state of consumption in the early stage, and it has been accumulated substantially since September. The consumption of molybdenum concentrate has decreased month by month since August, but the output of molybdenum concentrate has not decreased, and even showed a certain increasing trend in September. Northeast China took the lead in reducing the price by 40 yuan per tonnage in early November to sell 4000 tons of molybdenum concentrate stocks in exchange for volume, and then ferromolybdenum prices fell sharply.

When will the domestic molybdenum market pick up?

When will the market pick up in winter?

Winter Environmental Protection and Winter Olympic Games: many places have issued the "2021-2022 Autumn and Winter Air pollution Prevention and Control Action Plan" to impose certain restrictions on the output of downstream steel mills.

The hosting of the Winter Olympic Games may control the safety and environmental protection of Beijing, Tianjin, Hebei and even the north. At present, it is widely rumored in the market that production will be limited within a certain mileage around Zhangjiakou.

Steel mills limit production and protect prices: the high-level "meeting" of 6 medium-broadband stainless steel factories in Jiangsu, Zhejiang and Guangxi was held in Foshan. As the mainstream enterprise affecting the stainless steel broadband market, the senior leaders of the six stainless steel factories conducted full communication and exchanges, and reached a consensus in the discussion: according to the existing production capacity, the output of the steel mills was reduced by 30%, and the production reduction was maintained until the end of the year. This is a good way to respond to the national policy and realize the "stable market and stable supply" of the stainless steel market.

Nakazawa Ji iron molybdenum deep processing project put into production: the first phase of the production line of Nakazawa Ji iron molybdenum deep processing project has entered the stage of trial production. The first phase of the construction of an annual output of 6000 tons of ammonium molybdate, 5000 tons of high-purity molybdenum oxide, 10000 tons of ferromolybdenum production line.

The total construction scale of the third phase: annual output of 36000 tons of ammonium molybdate, 29500 tons of high-purity molybdenum oxide, 20000 tons of ferromolybdenum production line, 5000 tons of molybdenum powder, 2040 tons of molybdenum products.

Pre-festival stock and raw material inventory of steel mills are low: at present, due to the decline in the previous market, steel mills generally postpone bidding, resulting in low raw material inventory and high demand for ferromolybdenum.

From December to January, affected by the Spring Festival and the cold winter this year, coupled with the early Spring Festival this year, many steel mills have pre-festival stock plans, and the stock volume is likely to increase, which will provide some support to the market.

SMM expects a phased recovery in December, and a real recovery in the market is expected in March next year. The early market continues to be weak, steel mills enter the bidding cautiously leading to the current steel raw material inventory is generally low, superimposed steel mills stock before the Spring Festival, rigid demand is expected to form a certain support for the molybdenum market. At present, although the output of steel mills has recovered somewhat, it is still at an all-time low, and this recovery is mostly for the supplement of October and early November, as well as the impact of the Spring Festival, so the recovery is limited. In March, the pressure on the heating season, the Winter Olympic Games and production restrictions will be reduced, real demand will resume downstream, and prices are expected to continue to rise.