MOLLY

Jan 26, 2016, 11:10 ET from Roskill Information Services

Short-term pain to ease in 2017

Molybdenum prices showed the first signs of stabilising and of a potential recovery in December 2015, countering the usual seasonal reduction. Molybdenum prices are unlikely to fall significantly in the first half of 2016 as molybdenum demand returns to growth and the availability of supply from primary molybdenum mines falls further. However, prices are unlikely to return to levels seen in early 2014 during 2016, partly as stockpiles built-up in 2015 may be released into the market as prices stabilise or shows signs of a rise, delaying any consistent price increases. Rising demand for molybdenum-bearing steel and chemicals is instead forecast to support a recovery in molybdenum prices from 2017, to around US$13-15/lb ferromolybdenum.

In the medium-term, prices will be capped by the availability of molybdenum from existing and new copper by-product, and primary molybdenum, operations. Nevertheless, the current period of lower prices has reduced confidence in molybdenum project development, especially for primary molybdenum operations, which could impact supply availability from the early 2020s with prices rising strongly. Any significant change in copper demand affecting by-product supply, or the copper project pipeline, could exacerbate the supply situation for molybdenum more quickly.

COPPER

In July, Barclays Plc said supply may exceed demand every year through to 2020.