Molybdenum prices will rise over the next two years as rising demand tightens a global surplus of the metal, a Chilean government agency said in a report Thursday.
According to the Chilean Copper Commission, which monitors the mining industry and markets for the government, molybdenum prices will average $7/lb during 2017 and 2018, compared with $6.60/lb this year, as demand increases in China and the global oil and gas industry.
"The recent agreement by oil exporters at OPEC to reduce oil production, which has led to a significant increase in oil prices, bodes well for molybdenum demand," Cochilco said.
Global demand could rise 4.2% next year to 289,000 mt, following 1.1% decline in 2016, Cochilco said. Another 6.1% increase is forecast for 2018 as growing demand in China, the US and Europe offsets lower consumption in Japan.
Meanwhile, global production will rise 7.2% next year to 297,000 mt, driven by higher secondary production from copper mines in Chile and Peru as well as a gradual recovery at primary molybdenum mines.
Chilean production is set to hit a record 63,000 mt, Cochilco said.
Global production will rise again in 2018 to 309,000 mt, Cochilco said. As a result, next year's predicted surplus of 7,900 mt will shrink to around 1,800 mt in 2018.
