Molybdenum Market Update (May 17, 2012)

Molybdenum prices remained in a holding pattern this week as buyers took a wait-and-see approach in light of continued economic uncertainty in Europe.

In Asia, molybdenum held steady at around $14 a pound on Monday as the gap widened between bid and offer prices. According to Platts, most Chinese traders refused orders below $14 a pound, while South Korean buyers asked for $13.60 to $13.80. The spread meant that many deals did not close.

The story was much the same in India, where buyers resisted quotations above $35.30 per kilogram (or roughly $16 a pound) as they held out for lower prices amid signs of weakening international demand. An unstable exchange rate between the rupee and the dollar added further uncertainty.

In other news, Indonesia’s sweeping ban on exports of a number of unprocessed metals, including molybdenum, came into effect on May 6. The ban is aimed at increasing the value of shipments and building local smelter capacity.

Looking long term, molybdenum prices should recover as developing countries like China and India continue to grow more urbanized and spur demand for steel for construction (molybdenum is an essential component of steelmaking). Right now, China is the leading consumer of molybdenum. It’s also the biggest producer, with 42.3 percent of world output.