The molybdenum market enjoyed three years of growing demand between 2016 and 2018, but macroeconomic concerns and a slower steel market resulted in a 2.3% decline in 2019. Mine supply continued to edge higher in 2019, albeit by a relatively slow 0.7% - an identical rate of growth as 2018. This slow growth in mine supply, combined with the drop in demand, was sufficient to flip the molybdenum market from a deficit in 2018 into a surplus in 2019. Consequently, molybdenum prices came under downward pressure.
London: UK, Sept. 09, 2020 (GLOBE NEWSWIRE) -- The molybdenum oxide price reached a peak of US$12.5/lb Mo in March 2019, but it gradually slipped from this level, with the decline accelerating in the fourth quarter of 2019. By December, the molybdenum oxide price stood at US$9.5/lb Mo.
If the market had been expecting a recovery in 2020, those hopes were quickly dashed as the COVID-19 pandemic forced governments worldwide to impose restrictive measures to slow the disease’s spread, but which also resulted in a sharp slowdown in economic activity. Many molybdenum-containing steels and catalysts are used by the oil & gas industry, making molybdenum particularly sensitive to oil & gas market developments. In the first half of 2020, the Brent crude oil price crashed from US$67.3/bbl in December 2019 to US$18.4/bbl in April 2020. The price has since recovered but remains well below levels seen in 2019. As a result, Roskill expect demand for molybdenum to drop by over 8% in 2020.
Under COVID-19 restrictions, certain mines have adopted different work practices, further slowing operating rates. Other mines decided to cut production by up to 50% such as the Climax mine in the USA, Operational issues elsewhere, notably Yichun Luming in China suspending production following a tailings spill mean Roskill expect mine supply to fall by 4.5% in 2020.
In 2021 as macroeconomic conditions recover Roskill expect demand to improve. Demand is forecast to rise by 7.1% in 2021, but at the same time, supply is also expected to recover as operating rates at existing mines improve and as new projects are commissioned. As a result, the market is likely to remain in surplus in 2021, albeit a narrower one than is forecast for 2020.
Demand is expected to rise again strongly in 2022 as the market continues to recover from the 2020 slump. Thereafter, however, demand growth is expected to revert to historical growth rates as much of the impacts of COVID-19 are recovered.
In 2019, 72.4% of global molybdenum mine supply primarily came from copper by-product mines, a ratio that has remained relatively stable since 2016. Looking ahead, Roskill forecast little change for this ratio, due to a combination of new projects being commissioned, and restarts of curtailed capacity at primary mines.
CONTACT: Olivier Masson Roskill Information Services Ltd +44 (0)20 8417 0087 Olivier@roskill.com Zoe Cripps Roskill Information Services Ltd +442039781850 firstname.lastname@example.org