CPM Group Releases Molybdenum Market Outlook 201412 Jan 2015
FOR IMMEDIATE RELEASE
12 January 2015
CPM Group Releases Molybdenum Market Outlook 2014
CPM Group has released its 2014 Molybdenum Market Outlook. The 445-page study provides in-depth analysis of global molybdenum supply, demand, and price trends, including projections for the next 10 years. The report contains mine-by-mine production statistics and forecasts from 2000 through 2023, mine costs for both primary and by-product producers in China and the western world, details on global roasting capacity, demand projections by end-use, and information on regional molybdenum markets around the world. The prospects for the Chinese molybdenum market are highlighted in a 70-page Focus on China section, which includes detailed production costs, project and provincial-level supply figures, mining regulation and trade policy changes, and key demand drivers. In addition, a project reference guide is provided with details on more than 140 potential molybdenum mines in various stages of development. The Molybdenum Market Outlook provides 10-year forecasts for supply, demand, and prices under a base case and two alternative scenarios. CPM Group has been producing these detailed reports on molybdenum and other specialty metals since 2007.
New York, NY, 9 January 2015. Molybdenum prices (basis Platts Metals Week, US$ per pound Mo contained) rebounded in 2014 after three consecutive years of annual price declines. Prices were bolstered by the underlying strength in demand for molybdenum. Prices remained below the historical average of $13.09 between 2009 and 2013, however. Looming surplus over the near- and medium-term horizon is likely to weigh on annual prices through 2016.
In the near term, uncertainties may arise from pending changes to China’s export and resource tax policies. The government has maintained current molybdenum export duties for 2015 until further announcement in May 2015. In the meantime, the government may move ahead with proposed changes in resource taxes as early as the start of 2015. Prices may face short-term headwinds if the market grows concerned about possible outflow of Chinese stockpiles following the potential removal of current export duties. However, if policy changes increase domestic production costs in China, molybdenum prices may receive some fundamental support.
Over the next ten years, molybdenum supply growth will continue to hinge on supplies from copper mines that produce molybdenum as a by-product. The market share of by-product producers averaged 50.9% between 2010 and 2013. Molybdenum byproduct output is projected to increase at a CAGR of 5.6% and contribute more than 70% of new supplies expected to be brought online during the projection period.
Positive fundamentals in the copper market combined with historically elevated molybdenum prices between 2008 and 2012 have encouraged many by-product producers to expand their copper and molybdenum operations, which could continue to contribute to medium term molybdenum supply growth. However, over the past two years cost cutting measures by large diversified mining companies have started to delay development for many longer dated copper projects. As a result, molybdenum supplies from by-product producers are expected to slow during the second half of the 10-year projection period.
China is the world’s largest primary molybdenum producer. Its contribution to global production is expected to decline to roughly 28% between 2019 and 2023 from a historical average of 32% between 2000 and 2013. It is largely due to structurally elevated cost of production and potential changes in policies in its molybdenum market. Production from Chinese swing producers – small and medium-sized mines – had declined over the past few years due to adverse market conditions and higher production cost. CPM Group projects supplies from these producers declined on average 12% in 2013 and 2014, after adjustments to prior years’ official statistics.
Growth in global molybdenum demand is estimated at 3.1% in 2014, up from 2.9% in 2013. The increase in demand growth is helped by ongoing recovery in the specialty steel usage as well as positive growth in its application in the non-metallurgical sector.
Molybdenum demand growth is expected to remain moderate for the first half of the forecast period. A temperate longer term growth outlook for industrial production in several key emerging markets, coupled with uneven and fragile economic recovery of developed economies since the 2009 recession, will largely remain in the background, keeping a cap on growth of molybdenum’s many enduses.
Near term global economic headwinds could cap the growth in several steel sectors over the next several years. However, decent stainless steel production growth, mostly from China – is expected to provide support for molybdenum consumption growth in this sector. Rising wealth and living standards improvement in emerging markets could also drive stainless steel consumption and thus molybdenum demand growth in the later years of the forecast period.
Molybdenum demand growth is expected to be slightly back-loaded in the forecast period. Long-term requirements and investments in energy infrastructure and growth in transportation industry, as well as increases in the intensity of molybdenum use in emerging markets, could drive stronger growth of molybdenum end use in the steel industry. In addition, non-metallurgical molybdenum consumption, which includes molybdenum use in catalysts, is projected to record more robust growth during the projection period.
The CPM Group Molybdenum Market Outlook is part of a series of long-term studies of ferroalloy and specialty metals markets. These studies are used by producers for strategic planning and in the preparation of technical reports. In addition, consumers, institutional investors and physical traders supplement their internal research with CPM Group’s comprehensive analyses, conclusions, and projections. The reports also serve as authoritative reference guides for molybdenum market statistics. CPM Group sells the reports as stand-alone products, although most clients use the CPM Group reports as parts of broader consulting packages related to the specific metals markets.
About CPM Group:
CPM Group is the world's premier commodities research and consulting company. The firm’s primary focus is on precious, industrial, and specialty metals, in addition to undertaking research and analysis across all commodities markets. In the ferroalloy and specialty metals industry CPM Group has developed a top-rated expertise in molybdenum, vanadium, manganese, and tungsten, as well as other minor metals. CPM Group provides a suite of research and consulting services related to the financial management of commodities exposure, including fundamental market research and analysis, consulting and advisory services, commodities management and asset management services, and corporate finance advisory. Founded in 1986, CPM Group is known for its research and analysis of the metals markets, its overall economic analysis of commodities markets, and its expertise in financial engineering, using derivatives to structure optimized positions for commercial hedgers and institutional and high net worth individual investors.
CPM Group clients include major producers, processors, market intermediaries, and industrial users of commodities. Institutional investors engaged in investing in commodities and commodities producing companies retain CPM Group for research, analysis, and advice on managing their financial exposure to these markets. Institutional investors, hedge funds, private equity funds, and family offices rely on CPM Group for accurate analyses of commodities markets. Central banks; foreign ministries; and agencies involved in attracting foreign direct investment, strategic metals policies, energy and agriculture; and sovereign wealth funds have drawn on CPM Group’s knowledge and experiences since the 1980s in these areas.