China Moly Traders Cut 2015 Contract Volumes on Uncertain Outlook
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- Category: Molybdenum's News
- Published on 07 January 2015
- Written by luya
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Chinese traders have cut their contract volumes of molybdenum oxide imports from Western countries for 2015, because of uncertainties over the outlook for the coming year, trade sources said Wednesday.
Two Chinese traders said they have renewed annual contracts with producers in South America and other regions, but have decreased their offtake volumes.
"[We] signed long-term supply deals for next year, but quantity has reduced a bit," said one trader.
Another trader said his company has lowered contract purchase volumes as he prefers sourcing from the spot market.
A producer source said some Chinese term customers did not renew contracts for 2015 as outlook remains uncertain.
"Some clients foresee a win in the first half of the year, while in the second half, they worry about suffering [from lower prices]," said the source.
Uncertainties over the Chinese export tax policies, in addition to supply and demand, are also discouraging decisions for 2015.
China imposes 15-20% export tax on molybdenum products to discourage exports of energy-intensive products.
The tax is expected to be removed or reduced in 2015, following the World Trade Organization ruling that the Chinese export tax did not comply with WTO rules.
"It is hard to predict the market, the export duty may be removed in May but not sure," said one South Korean trader.
China produced around 82,000 mt of molybdenum-in-concentrate (181 million lb) in 2013, according to state-run mining information provider Antaike.
In addition, the country imports around 10,000 mt/year, mostly from Western countries, for re-sale to buyers in South Korea and other Asian countries.
China could be importer or exporter depending on moly price levels in domestic China and in international markets.
Chinese domestic moly concentrate prices were heard at Yuan 1,230-1,250/mt ($9.26-9.28/lb) this week for 50-55% moly content material.
"Few deals [were] concluded," said one Chinese trader.
A Chinese mill awarded a ferromoly buy tender on December 23 at Yuan 84,000/mt, lower than Yuan 87,000-88,000/mt levels earlier this month, said the Chinese trader.
The South Korean trader said he expected Chinese domestic prices to remain weak in January, with a possible recovery expected after the Lunar New Year holidays in the third week of February.
Due to low Chinese moly concentrate prices, Chinese export prices of pure moly metal for chemical applications were also weak, where it was offered this week at $27.20/kg CIF Rotterdam, the trader said.
Meanwhile, outside of China, prices were stable at around $9/lb for moly oxide and $23/kg for ferromoly, sources said.
Sales were reported Wednesday at $9.05/lb CIF Busan for a total of 40 mt of South American-origin oxide powder. Ferromoly was offered at $22.80-22.90/kg CIF Asia.
Like Chinese traders, many Asian buyers are hesitating to do businesses because of an uncertain near-term outlook.
In January, demand in Asia is seen to improve from December, while prompt supplies will be limited in South Korea until the third or fourth week of January when cargoes from Chile arrive. But prices may stay low depending on the European market conditions, South Korean traders said.
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