Spot molybdenum concentrate prices have surged this month on strong demand from Chinese moly oxide producers, ahead of the 2019 term contractual negotiations throughout the global moly supply chain, Asian market sources said Monday.
Recent spot deals for South American moly conc, which is feedstock for moly oxide production, were done 5%-8% higher compared with the term price for the current year as the spot market tracked Chinese domestic prices higher, Chinese moly oxide producers said.
One producer said September-October sell tenders for 100-300 mt volumes of South American conc, with 45%-50% moly and maximum 2% copper content, were awarded at 10%-11% discount to the monthly average of Platts moly oxide benchmark.
To compare, the 2018 term contract price for conc of this grade was 15%-18% discount to the monthly Platts moly oxide benchmark, several producers said.
One Chinese producer said domestic Chinese conc price was heard Monday at 10% minus Platts benchmark, due to supply shortage caused by government environmental restrictions forcing some mines, roasters and smelters to close.
As a result, inquiries for moly conc, both for spot and 2019 term parcels increased, a Japanese trader said.
"If people cannot get any conc for 2019, market for moly oxide may be tight," the Chinese producer warned. Another Asian producer outside of China, however, said he felt the talk of a tight conc market may be over heating.
A 10% discount to the Platts benchmark would be acceptable for conc with over 50% moly content, but not for the 45%-50% grade, the Asian producer said.
Meanwhile, the 2019 negotiations for moly oxide and ferromoly, used for specialty steel production, have started among a handful of consumers in Asia and producers this month, producer and trade sources said, adding that only volumes have been discussed so far.
Moly conc is likely to weigh more on the 2019 negotiations for moly oxide, briquette, ferromoly, moly metal, chemical moly and other products in the moly supply chain, as supply of the moly feedstock has been the tightest in the last five years, market sources agreed.
However, various downstream product prices will not rise at the same pace with the conc prices, market sources also cited.
Chinese moly oxide producers said despite the conc shortage, domestic demand and supply of ferromoly is balanced with demand at 7,000-10,000 mt/month. Ferromoly, which is produced from moly oxide, is the most preferred form of moly product among Chinese steelmakers.
Moly oxide, which is directly produced from the conc, is traded more actively in international markets than in China, as some steelmakers use more oxide and briquette than ferromoly.
In the international market, spot demand for moly oxide has been relatively lackluster compared with conc, as steelmakers seem to have enough supplies from term contracts.
One Chinese producer said he would not sell oxide below $12/lb ex-warehouse Busan, as he was low on stock. However, a South Korean seller said bids at $11.80-$11.85/lb may attract buyers as outside of China, buyers were not easy to find.
