SHANGHAI, Jan 17 (SMM) - Generally speaking, the actual production of domestic and overseas molybdenum mines has been falling as a result of multiple factors including the pandemic outbreak, maintenance, falling ore grade, etc. Moreover, importing molybdenum is not profitable at present based on the overseas prices, hence the supply of raw materials for ferromolybdenum is relatively tight in China.
On the demand side, the operating rates of stainless steel mills were low in the second quarter of 2022 when the terminal demand contracted amid the severe covid-19 pandemic outbreak in east China, and the stainless steel prices were also contained. In the third quarter, with the improvement of pandemic situation, the terminal demand picked up while the stainless steel mills completed their overhaul, generating more demand for ferromolybdenum. In the fourth quarter, the energy crisis in Europe intensified which forced a number of stainless steel mills to be shut down. Therefore, the demand for Chinese stainless steel boomed, another bull for ferromolybdenum demand. To sum up, the prices of molybdenum in China have continued to rise under the twin support of cost and demand.
SMM predicts that in 2023, with the enhanced policy support for the steel industry, the consumption of molybdenum will pick up thanks to the animation of stainless steel and special steel sectors. In addition, in the case of limited new molybdenum concentrate capacity around the globe, the supply of ferromolybdenum will remain tight, offering strong support to ferromolybdenum prices.