Running up that hill, and down and up again? Our mid-year Moly update.
Earlier this year, we released a blog on the spiking price of Molybdenum, which was trading at an astounding US$95/kg in late February. Have a read of our previous blog post, which goes into detail on Moly and its various uses.
As of May 2023, the price of Moly has reduced to US$50/kg, and has been somewhat stable in the US$50s/kg for the last month or so. A significant drop but a price higher than previous years, nonetheless. So, what explains this price drop, as well as the price Moly is hovering at now? Keep reading for a brief discussion and price update.
As stated in our previous blog, Moly is experiencing sustained increase in demand due to its use in several high-growth industries. Used in Grade 316 Austenitic Stainless steel, Grades 2205 & 2507 Duplex Stainless steel, Grade 904L ‘6 Mo’ Austenitic Stainless steel and several specialised Nickel alloys, a significant proportion of demand comes from products including these performance metals. Notably, increased defence and aviation spending in the U.S, investment worldwide into Green technologies, and the ever-growing electronics and medical equipment markets will all feed Moly demand for decades to come. The Moly market is expected to hit US$500B in 2033.
But if demand for Moly continues to grow, why has the price dropped by US$40/kg since February?
Early 2023 saw a notable supply squeeze in China. This, combined with supply constraints from other major Moly supplying nations such as Chile, cut worldwide supply significantly. However, stock increasing over the following months has caused the price to relax compared to February’s spike. Note that YOY Moly prices are still increasing, up US$30/kg compared to May 2020. Thus, we can conclude that the two major factors contributing to Moly prices are:
In the long term: sustained demand.
In the short term: supply constraints.
To keep an eye on potential price changes, we can watch key suppliers, including:
BHP Billiton Group
Jinduicheng Molybdenum Co.
American CuMo Mining
Thompson Creek metals
Moly Metal LLP
ENF Ltd.
Compania Minera Dona Ines De Collahuasi S.C.M.
Freeport McMoran
Unlike industry growth, it is difficult to predict upcoming supply constraints; another price spike, like the one seen in February, therefore is possible.
At Stirlings, we are always watching the Moly market very carefully and how it is affected by various factors. Keep in the loop with us by following our social media pages and signing up to our monthly news updates!