Molybdenum Outlook 2019: Price Recovery to Continue

After a rocky year for metals, many investors are wondering what’s ahead for commodities. Learn more here about the molybdenum outlook.

Last year, molybdenum started to see a recovery in prices and many market watchers predicted that in 2018 the metal would continue to rebound.

Molybdenum lived up to those expectations, with prices trending upwards most of the year on strong demand from the stainless steel sector.

With 2019 just around the corner, investors interested in the industrial metal are now wondering about the molybdenum outlook for next year. Here the Investing News Network looks back at the main trends in the sector and what’s ahead for molybdenum.

Molybdenum trends 2018: The year in review

Molybdenum prices recovered over the course of 2017, following two successive years of decline.

“There have been further gains in 2018, with prices rising to an average of US$30.8/kg in March of this year, but since then, prices have started to trend lower, albeit slightly,” Roskill states in its latest molybdenum report.

The ferromolybdenum price averaged about US$29 per kilogram for 2018, as per the research firm.

Similarly, General Moly (NYSEAMERICAN:GMO) says molybdenum has been a consistent standout among metals during 2018.

“We believe that industrial metal prices are coming off their lows,” said Bruce D. Hansen, CEO of General Moly. “With the strong US economy and developed countries firmly in the late-stage business cycle supportive of metal demand, we believe we have the makings of an industrial metal recovery that is the rising tide to lift all ships and further boost moly.”

Hansen added that continued strong demand from stainless steel and the oil and gas industry, especially the rapidly expanding global liquid natural gas sector, underpinned the strongest year in four years for molybdenum prices.

Most molybdenum is used in the production of steel products, with part of this consumption linked to oil and gas sector activity, where molybdenum-bearing steels are used in drilling equipment and in oil refineries.

Last year, demand for the metal was 18 percent higher than a decade previously, thanks mainly to increased use in steel applications.

“However, there have been other significant changes in molybdenum demand over the same period, namely where this molybdenum is being consumed,” Roskill says.

According to the research firm, consumption in China has increased 15 percent between 2007 and 2017.

“The increase in China’s share of consumption in the past decade has been at the expense of other industrialized countries: demand in the USA [and Europe] has shrunk over the same period.”

In 2018, consumption from the oil and gas sector should continue to have grown, but more slowly than in 2017. “[That’s because] the number of oil and gas rigs operating worldwide has continued to grow so far in 2018, but at a slower pace than last year,” Roskill explains.

In terms of supply, analysts estimate around 60 percent of global molybdenum supply comes as a by-product of copper smelting, with most of the remainder coming from primary sources.

Molybdenum output rose by 14 percent in 2017, recovering from two consecutive years of decline.

“The rise in primary output in 2017 was mainly the result of higher production in China, where some large primary mines, such as JDC Moly, increased output in response to rising demand, while primary output also climbed in the USA,” says Roskill in its molybdenum report.

Molybdenum outlook 2019: Demand to remain strong

Looking ahead, Hansen said molybdenum is tough and resilient, as proven by its steady price during a sluggish third quarter for metals and commodities.

“Trade tensions will still cause unease, but over time, the actual trade agreements will be better than fears of the unknown as the parties will be motivated to share benefits rather than inflict pain. Copper is already showing signs of recovery. Other metals such as moly are going to have their due,” he added.

Speaking about the future of the market earlier this year, CRU Group Consultant George Heppel said that high prices are needed to encourage primary production from top producer China.

“The trend over the next five years is one of very low supply growth from by-product sources. In the early 2020s, we will need to see primary mines reopened to keep the market balanced.”

CRU forecasts molybdenum demand at 577 million pounds in 2018, of which 16 percent will come from oil and gas. That is below the historic pre-2014 average of 20 percent, but still a notable increase over recent years.

“The oil price crash back in 2014 removed about 15 million pounds of moly demand,” Heppel said. “Demand now looks healthy.”

Looking further ahead, demand growth is expected to continue, which should spur idle capacity to come back online and new mines to start producing.

“Until those new projects do come online, however, market deficits are likely in the short term, followed by several years of surpluses as the new supply becomes more than sufficient to meet rising demand,” Roskill forecasts.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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After a rocky year for metals, many investors are wondering what’s ahead for commodities. Learn more here about the molybdenum outlook.

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Catch up and get informed with this week's content highlights from Charlotte McLeod, our editorial director.

Top Stories This Week: Powell Gets Fed Nomination, Using Gold in a Market Correction youtu.be

We're back after a break last week with quite a bit to cover in the gold space.

After running up past the US$1,860 per ounce mark midway through November, the yellow metal has taken a tumble. At the time of this writing on Friday (November 26) afternoon, it was sitting just under US$1,790.

Gold's losses this week have been attributed to elements like a stronger US dollar and better Treasury yields, although Jerome Powell's US Federal Reserve chair renomination has pulled other factors into play — some market watchers believe he may move to taper and raise interest rates faster than anticipated.


If the Fed follows its previously laid out timeline for tapering, it will wrap up in mid-2022; the central bank has said it won't raise rates until after that. It has also emphasized that its roadmap may change if necessary.

Looking at the larger picture for gold, I heard recently from Nick Barisheff of BMG Group, who believes the stock market is due for a major correction.

"The market is due for a major correction. What will cause it and when it will happen is anybody's guess — it could be tomorrow, it could be six months from now" — Nick Barisheff, BMG Group

It's impossible to know when this correction will happen, but Nick emphasized the importance of acting before it's too late. He pointed out that investors are typically slow to get out of the market once a crash actually begins — they wait for a turnaround, and by the time it's clear there won't be one, they've experienced big losses.

In his opinion, the solution is to get out of the stock market early and transfer money into gold.

Here's how Nick explained it:

"Instead of taking your money off the table and going into cash … you go to gold (because cash is devaluing daily). Gold will at least hold its own and probably appreciate … so by sitting it out in gold you can wait until the market finishes correcting and then buy back in" — Nick Barisheff, BMG Group

With gold's future in mind, we asked our Twitter followers this week what price they think the metal will be at the end of 2021. By the time the poll closed, most respondents had voted for the US$1,800 to US$1,900 range.

We'll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

Finally, in the cannabis space, INN's Bryan Mc Govern spoke with Dan Ahrens of AdvisorShares to get his thoughts on 2021 trends and what's ahead in 2022.

Dan was candid, and said if he had to choose one word to describe the cannabis market in 2021, it would be "painful." Like many others, he's been disappointed in the industry's performance — while positivity initially ran high due to excitement about potential federal changes in the US, ultimately progress has been slow.

"Cannabis started with a big run-up in January and February ... and things dragged from there" — Dan Ahrens, AdvisorShares

Still, Dan has hope for 2022 and said it will be a "huge year" for cannabis. He believes US reforms will come sooner rather than later, and in his opinion those widely anticipated changes will bring a wave of M&A activity.

Specifically, he expects to see alcohol, tobacco and other consumer packaged goods companies making deals with cannabis players, not just cannabis entities doing transactions with each other.

"Those big alcohol companies, tobacco companies, other consumer packaged goods product companies — they're waiting. They're waiting on the US" — Dan Ahrens, AdvisorShares

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there's someone you'd like to see us interview, please send an email to cmcleod@investingnews.com.

And don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

cannabis plant layered with German flag graphic
Dmytro Tyshchenko / Shutterstock

Catch up on some of the biggest news of the week for the cannabis investment world.

Three political parties have formed a coalition in Germany, leading to a new government, and it has promised cannabis reform in the European nation.

Meanwhile, a popular cannabis retailer confirmed consumers will now find its products available for delivery on the Uber Eats mobile application in Ontario.

Keep reading to find out more cannabis highlights from the past five days.


Coalition of parties promises forward-looking cannabis policy

Germany, a country with comprehensive and elaborate medicinal rules for cannabis, is in a time of transition as a new government is set to begin to take over after 16 years of Angela Merkel.

Olaf Scholz, the proposed next chancellor of Germany, leads a three party coalition that will become the country's governing body. As part of its promises, talk of adult-use cannabis regulation has now gained even more momentum. A report from MJBizDaily quotes a German policy document that shows the coalition's stance:

"We are introducing the controlled distribution of cannabis to adults for consumption purposes in licensed shops. This controls the quality, prevents the transfer of contaminated substances and guarantees the protection of minors."

However, despite the promise and excitement, it remains to be seen how these ideas will be applied since no formal regulations have been drafted or approved yet.

Canadian cannabis retailer partners with popular delivery app

Tokyo Smoke, a cannabis retail operator in Canada owned by Canopy Growth (NASDAQ:CGC,TSX:WEED), announced a collaboration agreement with Uber Canada (NYSE:UBER) whereby cannabis consumers will be able to use the Uber Eats app to order products before they visit stores.

While the app won't let consumers get cannabis delivered to them, this new method opens the doors to more dynamic ways of buying cannabis.

"As a market leader in innovation and a platform used by so many Canadians, we believe this is the ideal next offering that can be done safely and conveniently on the Uber Eats app," Mark Hillard, vice president of operations with Tokyo Smoke, said in a press release.

A report from the Canadian Press indicates Ontario is considering allowing dispensaries to have delivery and pickup options made available to consumers permanently. The province allowed some of these purchasing options at the outset of the COVID-19 pandemic, but then removed them.

Lola Kassim, general manager of Uber Eats Canada, said this new end-to-end experience will provide consumers with responsible access to legal cannabis products.

Cannabis company news

  • Organigram Holdings (NASDAQ:OGI,TSX:OGI) issued financial results for its Q4 2021 period. In its report, the company notes a net loss of C$26 million despite a 22 percent uptick in net revenue to C$24.9 million. Beena Goldenberg, the newly appointed CEO of the firm, is encouraged by the market share position earned by the company, which said it became the fourth biggest producer in Canada during the reporting period.
  • Halo Collective (NEO:HALO,OTCQB:HCANF) confirmed the decision for Akanda, its spinoff company focused on international cannabis opportunities, to begin trading on a US exchange. "The number of shares to be offered and the price range for the proposed offering have not yet been determined," the company told investors in a press release.
  • High Tide (NASDAQ:HITI,TSXV:HITI) announced the acquisition of 80 percent of NuLeaf Naturals, a CBD product wellness developer, for an estimated US$31.24 million. The deal includes a three year option clause for High Tide to complete a total acquisition. "As international markets open up and as export regulations evolve, NuLeaf's cGMP-certified facility positions us to take advantage of the global CBD business opportunity," Raj Grover, president and CEO of High Tide, said.
  • Humble & Fume (CSE:HMBL,OTC Pink:HUMBF) released the financial report for its first 2022 fiscal quarter to shareholders and the market. "As the legal cannabis market in North America continues to mature, Humble remains agile and focused on providing a leading solution for brands to scale quickly and retailers to focus on their customers," Joel Toguri, CEO of Humble, said.

Don't forget to follow us @INN_Cannabis for real-time updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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