Trade Resources Industry Views Molybdenum Oxide Prices Continued Their Rally on Friday,Reaching a Nine-Month High

Molybdenum Oxide Prices Continued Their Rally on Friday,Reaching a Nine-Month High

Molybdenum oxide prices continued their rally on Friday, reaching a nine-month high, although some participants believe the market may be poised for a period of consolidation in the first half of April.

The Platts daily dealer molybdenum oxide assessment rose to $10.50-10.80/lb, with a midpoint of $10.65, from $10.35-10.65 and a midpoint of $10.50. Friday's assessment is the highest since June 10, 2013, when it was $10.70-10.85/lb. This time last year, the assessment stood at $10.70-10.80/lb.

Producer sources continued to report being very tight on spot material, especially in the US and Europe, while a consumer also agreed the market was tight.

A converter reported buying oxide powder for release next week at $10.90/lb, in-warehouse Rotterdam, saying it was the only offer he could get. Meanwhile, a producer reported a sale at $10.90/lb, delivered duty-paid, for prompt release, saying there was about 10 cents of freight involved.

A trader reported buying 20 mt of oxide powder spot at $10.70/lb in-warehouse Rotterdam, but was able to secure units from China in a range of around $10.40-10.50/lb ex-warehouses in Tianjin or Shanghai.

Briquette ranges were wide, although only one transaction was reported, with a seller reporting one sale at $11.10/lb, DDP Europe, also involving 10 cents freight. Offers were heard at 11.70-12.00.

A Chinese trader reported selling one container load of oxide powder at $10.40/lb in-warehouse China to a US customer and was planning to raise his offer price to $10.45.lb in the expectation of demand remaining strong.

Several sources attributed the strength of the current rally to consumers being forced onto the market after taking maximum requirements on long-term contracts and being unable to obtain additional loads on the contracts from incumbent suppliers. This was especially true in the US.

"In the US, there is real increase in demand," said one producer. "It's not just that they weren't properly covered on long-term contracts; they need additional material and the traders and the producers didn't have the extra units under the contracts, so the consumers and the traders are now covering the additional requirements on the spot market."

Traders and producers said they had found little or no resistance to higher prices from steel mills when they came out for spot requirements.

Another producer source agreed with the sentiment to an extent, but was unsure as to how long the additional demand would last. "That could be one way to interpret what's been happening," the producer said. "There is an element of it. There's no question there's been a bump from the stainless sector and we've seen that in oxide, but not so much in ferromoly."

But he said steel mills were likely to draw down on their April requirements on long-term contracts. "If they start drawing down and they hit the maximums mid-month, then they may come back to the spot market. But [the market] may pause until mid-month."

The producer doubted prices would fall, though, and said that a leveling out in price at these levels would "be no bad thing from the producers' point of view, whether they're primaries, or by-product like us. They haven't seen prices like this in ages."

A buyer for a large steelmaker, who had not been active in the spot market this week, agreed the market was tight now and could level out in the short term. "We covered before most of the rally [happened] when we had reached the limit on contracts," the buyer said. "Next week sees a new month, so we'll see if our contracts are sufficient to cover us. We think we're pretty well covered, but we may have some mills that may eventually need to cover something and we'll deal with it then." SIERRA GORDE UNCERTAINTY

Looking to the second half of the year, another producer source said there was still some uncertainty about the start-up timing of the new Sierra Gorde mine in Chile. "They will get praise if it [starts] July 1 as they expect," the producer said. "Normally in Chile it doesn't happen." And he said there would be a ramp-up period, but he expected Sierra Gorde would be producing molybdenum at some point in the second half of the year and would be well placed to be a player in the long-term contracts for 2015.

In the meantime, "the market has already priced in Thompson Creek being out," he said, in reference to US producer Thompson Creek Metals deciding to put its namesake Thompson Creek mine in Idaho on a care an maintenance basis once it reaches the end of its current mining phase, due at the end of this year.

Thompson Creek still has its joint-venture operation at Endako in British Columbia and is on the verge of beginning commercial copper production at its Mt. Miligan copper and gold mine, also in British Columbia.

Source: http://news.chemnet.com/Chemical-News/detail-2280256.html
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Moly Oxide Rallies to Nine-Month High, Some See Pause Ahead
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