BEIJING (Metal-Pages) 12-Nov-08. Chinese ferro-molybdenum prices have taken another dive during the last week on low demand from the steel sectors as mills continue to slash output amid uncertain economic outlook.
Prices for 60% min grade ferro-molybdenum were in a range of Rmb 120,000-124,000/tonne ($29.30-30.30/kg before export tax) on Wednesday, hitting the lowest level since May 2004. Last week’s prices were quoted at Rmb 140,000-142,000/tonne.
“Many stainless and specialty steel mills are continuing to make cutbacks in their output, which has hit the demand for noble alloys further,” a trader said.
A second trader echoed the sentiment, saying. “Last week some mills made a few purchases and prices were extremely low. The market is not expected to see a big recovery until the first half of next year.”
The price of molybdenum concentrates has likewise plunged, mirroring weak demand from its downstream market, with sources quoting the material in a range of Rmb 1,400-1,550/mtu ($9.31-10.30/lb), down from last week’s range of Rmb 1,650-1,750/mtu.
“As the Chinese government is trying to expand the country’s domestic demand and production levels for both the ferro-alloy and concentrates which have hit an extremely low point, it is likely that the market will see a rebound in the next few weeks, but I don’t think it will reach the record levels of 2005,” the second trader added.
Beijing has also announced that it will increase the value added tax on the mining of ores and concentrates to 17% from the 13% effective January 1, in an effort to curb mining capacity expansions.
“It will certainly increase the production cost for moly miners,” a ferro-molybdenum producer said. “However it is early to say whether it will have a big impact on prices. Moreover, not all ore transactions are being done on a duty paid basis in China.”
China produced a total of 59,618 tonnes of molybdenum concentrates during the January-September period, up 26.06% from last year’s level, according to statistics published by the China Nonferrous Metals Industry Association.
The export market has dramatically fallen, with sources putting ferro-molybdenum prices at $ 30-32/kg FOB for shipment, from last week’s range of $ 34-36/kg. Some aggressive offers are rumoured to be as low as $ 26-28/kg.
"The values of Chinese produced material are higher than European prices again, which indicates that overseas shipments will continue falling this month,” an export trader said.
China’s exports of the noble alloy have slumped in the first nine months of this year, according to the latest Customs data. Exports from the country were 5,131.4 tonnes, down 67.9% from 15,944 tonnes exported in January-September 2007.
Export prices of molybdic oxide are at $ 10-11/lb, according to a survey on Wednesday.
EUROPEAN MARKET
European ferro-molybdenum prices continue to slide with traders, reporting duty paid material between $ 24-28/kg versus $ 33-34 last week, traders said. Meantime, molybdenum trioxide is going for $ 10-12.50/lb.
Traders say they are paying little attention to unpaid material as duty paid prices so low. Those who did suggest prices put them in a bracket between $ 29-32/kg.
