SHANGHAI, Apr 25(SMM) -
Customs data shows that China exported 1,224 mt of ferromolybdenum in March 2022, a decrease of 8.6% from February. The main reason is that domestic prices of molybdenum continued to rise in March, resulting in the weakening domestic price advantages. Combined with strong domestic demand for ferromolybdenum in March, the supply could not meet the demand, leading to a sharp decrease in ferromolybdenum exports.
In mid to late March, domestic molybdenum prices continued to rise, from 165,000 yuan/mt at the beginning of the month to 178,000 yuan/mt, an increase of 7.88%. While overseas prices of molybdenum rose by only 2.03% in March. As of the end of March, domestic and overseas molybdenum prices stood at the same level, with domestic molybdenum prices for some molybdenum products even slightly higher than overseas prices, without taking into account shipping costs. The price advantage of domestic ferromolybdenum prices over overseas prices was lost. Meanwhile, downstream demand grew rapidly in March, but supply did not show much change. Domestic supply could not meet the demand and producers were less willing to export.
According to SMM, there were two reasons for the shortage in supply. On the one hand, the resurgence of pandemic in Jilin in March has affected the production and transport of many molybdenum concentrate factories in Daheiye, leading to a large gap in the supply of the domestic molybdenum concentrate. The reduction in supply supported the rise in molybdenum concentrate prices, which in turn drove up prices of ferromolybdenum. On the other hand, due to the prevailing pandemic in late March, many steel mills reserved a large number of stocks in advance out of concern about future transportation and their own low stocks of ferromolybdenum raw materials, heating the steel bidding market. According to statistics, the bidding of ferromolybdenum at domestic steel mills stood at 18,000 mt in March, a year-on-year increase of nearly 100%. Downstream demand increased sharply with full orders at smelters and the domestic supply was unable to meet the demand.
In April, the overseas prices of molybdenum moved rangebound, while the domestic molybdenum prices maintained an upward trend. Even though it fell slightly recently, it was still higher than overseas price without considering the shipping cost. Therefore, SMM expects that the domestic export of ferromolybdenum will continue to decrease in April.