Viewpoint: Steady output, higher demand buoy FeMo

Steady production levels, higher raw material costs and greater demand are expected to lift US ferro-molybdenum prices in the first half of 2019.

First-half 2019 output of molybdenum in North and South America is projected to be little changed from levels in the third and fourth quarter of 2018. Participants expect Chinese molybdenum production to hold at lower levels owing to environmental inspections and regulations.

Suppliers suggested that annual contract demand from stainless and long-product mills is set to surpass early 2018 levels by as much as 10pc. The rise in demand will likely drive further tightness for molybdenum oxide and force margins for alloy conversion under costs. As a result, alloy replacement costs will rise to eventually lift ferro-molybdenum prices.

Mills are expected to consume nearly full allotted volumes ahead of Chinese tariff decisions planned for 1 March. Trade uncertainties will weigh on spot trading, but if concluded, mills are expected to resume active spot market tenders.

Market participants remain concerned that a slowing US economy could drag on mill demand but did not expect an immediate impact during the typical restocking wave between January and March.

Imports of molybdenum oxide rose by 16.5pc to 2,948t in the first 10 months of 2018. Ferro-molybdenum imports climbed by 53pc to 9,793t from the prior year.