CPM Group Releases Molybdenum Market Outlook 2013

CPM Group Releases Molybdenum Market Outlook 2013

07 Jan 2014



7 January 2013

CPM Group has released its 2013 Molybdenum Market Outlook. The 435-page study provides in-depth analysis of global molybdenum supply, demand, and price trends, including projections for the next 10 years. The report contains mine-by-mine production statistics and forecasts from 2000 through 2022, mine costs for both primary and by-product producers in China and the western world, details on global roasting capacity, demand projections by end-use, information on regional molybdenum markets around the world, detailed trade tables for unroasted and roasted molybdenum, and a discussion of the ammonium dimolybdate market. The prospects for the Chinese molybdenum market are highlighted in a 70-page Focus on China section, which includes detailed production costs, project and provincial-level supply figures, mining regulation and trade policy changes, and key demand drivers. In addition, a project reference guide is provided with details on more than 140 potential molybdenum mines in various stages of development. The Molybdenum Market Outlook provides 10-year forecasts for supply, demand, and prices under a base case and two alternative scenarios, which model varying probabilities of supply from possible projects. CPM Group has been producing these detailed reports on molybdenum and other specialty metals since 2007.

New York, NY, 7 January 2014. Similar to other commodity markets, the relative strength of supply and demand has led to volatile swings in the molybdenum market balance and pricing over the last decade. Since the 2008 economic downturn, molybdenum has traded in a $10.20-band, reaching a low of $7.80 per pound in April 2009 and a high of $18 in February 2011 (basis Platts Metals Week, US$ per pound Mo contained). As of the end of December 2013 prices stood around $9.80.

Over the next couple of years supplies from copper mines with molybdenum by-product are expected to contribute a greater portion of molybdenum output. In terms of by-product/primary split, the market share of by-product producers averaged 50.5% between 2010 and 2012 and it is projected to reach a low for the projection period of 48.8% in 2013 before climbing back toward 60%. While many primary producers have been challenged by current molybdenum prices, some new copper projects and expansions also face delays and economic hurdles. Obstacles in obtaining financing are likely to affect the molybdenum market through the second half of the 10-year projection period.

Lower base metal prices since 2011 have led to significant write downs at many major diversified mining companies and new management teams have increasingly focused on cost cutting measures and operational efficiencies. Most major mining companies are working to lower production costs, while maintaining their market share. This has started to delay development decisions for many longer dated copper projects. Much of the anticipated boost in copper supply over the medium to long term continues to be pushed further out. Broad-based cuts and delays across the copper market are indirectly influencing molybdenum supplies in the later years of CPM Group’s 10-year outlook.

China is the world’s largest producer of primary molybdenum, contributing nearly two-thirds of global primary output. Soft demand from steel markers and a sharp drop in molybdenum prices led to cuts in Chinese supplies in 2013. Chinese supply remains one of the larger contributors to molybdenum market sentiment. CPM Group’s in-depth analysis of supply trends encompasses extensive research within China, to gather credible and reliable market intelligence. The outlook for Chinese supply under new and pending policy measures as well as in the current price environment are presented in the Focus on China section.

With the weak economic fundamentals in Europe, molybdenum demand growth was largely confined to China in 2013. Molybdenum demand has historically trended with global industrial activity and the steel stocking cycle; weakness in the western world has weighed on molybdenum prices. Although the China growth story is still intact, we are in the midst of a structural shift in the Chinese economy. China’s investment-led growth model is being reengineered. CPM Group’s analysis incorporates dynamic, forward-looking trends from each region and end use of molybdenum. The durability and strength of molybdenum have made it an ideal alloy when the end-use requires light weight, high strength, and corrosion resistant materials. Over the forecast period, demand for higher quality specialty steels and alloys will be required to provide the structural rigidity and corrosion resistance necessary to withstand decades of use in various construction applications and the build out of the energy infrastructure in emerging economies. Stainless steel and other specialty steel demand lags carbon steel in industrialization cycles by about 8-10 years. This late cycle behavior is perhaps intuitive give the applications for stainless, which include equipment in advanced industrial applications, such as chemical plants and energy production. These applications all tend to track rising wealth and living standards.

The CPM Group Molybdenum Market Outlook is part of a series of long-term studies of ferroalloy and specialty metals markets. These studies are used by producers for strategic planning and in the preparation of technical reports. In addition, consumers, institutional investors and physical traders supplement their internal research with CPM Group’s comprehensive analyses, conclusions, and projections. The reports also serve as authoritative reference guides for molybdenum market statistics. CPM Group sells the reports as stand-alone products, although most clients use the CPM Group reports as parts of broader consulting packages related to the specific metals markets.

To download the full table of contents, please click here. Alternately, contact Matt Taub at (212) 785-8320 or moly@cpmgroup.com for more information.

About CPM Group:

CPM Group is the world's premier commodities research and consulting company. The firm’s primary focus is on precious, industrial, and specialty metals, in addition to undertaking research and analysis across all commodities markets. In the ferroalloy and specialty metals industry CPM Group has developed a top-rated expertise in molybdenum, vanadium, manganese, and tungsten, as well as other minor metals. CPM Group provides a suite of research and consulting services related to the financial management of commodities exposure, including fundamental market research and analysis, consulting and advisory services, commodities management and asset management services, and corporate finance advisory. Founded in 1986, CPM Group is known for its research and analysis of the metals markets, its overall economic analysis of commodities markets, and its expertise in financial engineering, using derivatives to structure optimized positions for commercial hedgers and institutional and high net worth individual investors.

CPM Group clients include major producers, processors, market intermediaries, and industrial users of commodities. Institutional investors engaged in investing in commodities and commodities producing companies retain CPM Group for research, analysis, and advice on managing their financial exposure to these markets. Institutional investors, hedge funds, private equity funds, and family offices rely on CPM Group for accurate analyses of commodities markets. Central banks; foreign ministries; and agencies involved in attracting foreign direct investment, strategic metals policies, energy and agriculture; and sovereign wealth funds have drawn on CPM Group’s knowledge and experiences since the 1980s in these areas.