Molybdenum News Center

China's Moly Producers to Face Another Challenging Year in 2015

Chinese producers of molybdenum concentrate and ferromolybdenum will face yet another challenging year in 2015 characterized by relatively low prices and steady demand, market sources said at a molybdenum event in Xiamen at southern China's Fujian province over the weekend.

Participants at the event anticipate domestic molybdenum concentrate prices to average around current levels of Yuan 1,100/mtu ($179/mtu) this year -- substantially lower than average prices seen over the last three years.

A moderate recovery, however, may be possible after May if Chinese molybdenum producers are able to resume exports of ferromolybdenum should the 20% export tax be removed under World Trade Organization agreements.

The export tax has been in place since 2008.

With concentrate prices at current low levels, most of China's molybdenum miners still in operations are incurring losses, an official from a major miner in China said on the sidelines of the 11th China Molybdenum Annual Conference that was held over March 27-29.

The hardest hit, however, were mostly small and private operations, according to Jia Hongyan, general manager of conference organizer Molyworld.

He estimated about 80% of China's molybdenum miners -- comprising mostly small and private operations -- have halted productions since 2014 because of the slump in prices.

China's molybdenum concentrate prices have been declining throughout last year, and have now stabilized at Yuan 1,100/mtu.

This is substantially lower than the average of Yuan 1,330/mtu for 2014, Yuan 1,510/mtu for 2013 and Yuan 1,630/mtu for 2012, Jia said at the conference.

Meanwhile, China's top molybdenum miners -- including China Molybdenum, Jinduicheng Molybdenum, Yichun Luming Molybdenum and China National Gold Group -- are all operating normally, according to market sources.

This would help maintain the precarious balance in demand and supply for 2015, as both China's national economic and molybdenum demand are expected to remain largely unchanged.

Yichun Luming in northeast China's Heilongjiang province would probably be the only exception among the Chinese miners by proceeding to ramp up its moly output to the full capacity at 3,000 mt/month in 2015 from the current 2,200 mt/month.

After starting mining and concentrating in June 2014, Yichun Luming, with deposits rich in molybdenum content, has comparatively lower concentrating costs than competitors, producing concentrate at 50-55% molybdenum content.

China's molybdenum concentrate supply was overall balanced in the domestic market for 2014, Jia said, with the monthly supply at 15,650 mt, slightly more than consumption of 15,110 mt/month.

Ferromoly accounts for the majority 70% of total consumption, with the rest comprised of molybdenum products for chemical utilization.

Ferromoly is the alloy for special steel production including stainless steel.


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