Ferromolybdenum prices gain nearly 10% in just over a month amid tight raw material supply and improved purchase activity. [SMM Commentary]

SMM News on May 27:

On the raw material side, the supply of molybdenum concentrate is tight, and suppliers are increasingly reluctant to sell, making it difficult to find low-priced cargo in the market. On the demand side, steel tenders are gradually entering the market. As several mainstream steel mills have successively entered the market for procurement, this has provided support for molybdenum prices from the demand perspective. In particular, representative steel mills have accepted higher prices for ferromolybdenum, leading to a strong upward trend in ferromolybdenum prices. Supported by both supply and demand, the overall prices across the entire molybdenum industry chain have shown a significant upward shift, with ferromolybdenum prices surging nearly 10% in just over a month!

Prices: Molybdenum concentrate prices have risen by over 10% in just over a month, with molybdenum oxide and ferromolybdenum also showing significant increases.

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From the perspective of the average price trend of 45% molybdenum concentrate: On May 27, the average price of 45% molybdenum concentrate was 3,655 yuan/mtu. Compared to its low point of 3,315 yuan/mtu on April 24, it has risen by 340 yuan/mtu in just over a month, representing a 10.26% increase.

From the perspective of the average price trend of molybdenum oxide: On May 27, the average price of molybdenum oxide was 3,735 yuan/mtu. Compared to its recent average price low of 3,415 yuan/mtu on April 24, it has risen by 320 yuan/mtu, representing a 9.37% increase.

From the perspective of the average price trend of ferromolybdenum: On May 27, the average price of ferromolybdenum was 240,500 yuan/mt. Compared to its average price low of 219,000 yuan/mt on April 25, it has risen by 21,500 yuan/mt, representing a 9.82% increase.

Fundamentals

Supply Side:

From the perspective of upstream molybdenum concentrate production: According to SMM data, China's molybdenum concentrate production increased slightly MoM in April. In mid-to-late April, the domestic molybdenum market continued to show a strong upward trend, with mines and suppliers reluctant to sell and refusing to budge on prices, making cargo relatively scarce in the market. Smelters' quotations also continued to rise. With the further increase in tender prices from steel mills, the profitability of molybdenum concentrate effectively recovered, and the operating rate of molybdenum mining enterprises increased somewhat. As molybdenum concentrate prices continued to rise in April, molybdenum concentrate smelters may increase their operating rates. SMM analysis predicts that molybdenum concentrate production in May 2025 may continue to increase.

From the perspective of ferromolybdenum production: According to SMM statistics, China's ferromolybdenum production increased slightly MoM in April. In the ferromolybdenum market, despite the significant increase in ferromolybdenum prices since late April, high production costs and strong price-driving sentiment from steel enterprises still pose significant pressure on intermediate smelters, and the risk of cost-revenue inversion has not yet been alleviated. Due to the tug-of-war between supply and demand, profits in the ferromolybdenum market have not yet turned positive. The operating rates of some ferromolybdenum smelters have only increased slightly. With the gradual recovery of downstream demand, it is expected that ferromolybdenum production will continue to increase slightly MoM in May.

Demand side: A large steel mill accepted a procurement offer for ferromolybdenum at a price of 230,000 yuan per base mt, boosting market confidence. This week, other steel mills have also entered the market for procurement, providing support to the demand side of ferromolybdenum prices. Currently, molybdenum prices are holding up well, making it difficult for steel mills to drive down prices. Driven by demand, steel mills remain in a passive position in the short term.

Outlook

In summary, on the supply side, the tight supply of raw materials is unlikely to ease in the short term, which may continue to support molybdenum prices. On the demand side, the delivery of short-term rigid demand orders forces downstream enterprises to accept high-priced supplies. Before there is a significant improvement in the supply of raw materials or a noticeable decline in demand, it is expected that molybdenum prices will continue to hold up well. However, in the medium and long-term, with high molybdenum raw material prices and limited downstream acceptance, it is anticipated that back-and-forth negotiations between upstream and downstream in the molybdenum industry chain will intensify. Regarding the demand from steel mills: Considering the limited profit margins of steel enterprises, this will prevent steel mills from continuously procuring ferromolybdenum at excessively high prices, which may limit the room for molybdenum prices to rebound.

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