Demand for primary molybdenum is estimated to have risen by 3.9% in 2018, following an 8.9% rise in 2017. Demand for molybdenum benefited from rising steel production, in turn also benefiting from a 7% year-on-year rise in oil & gas drilling activity. Output of full alloy steels, high-strength low-alloy steels, tool steels, stainless steels and cast iron all climbed in 2018, as they did in 2017, which has underpinned the growth in molybdenum consumption over the past two years.
The steel industry is the major consumer of molybdenum, across a wide range of steel types, with smaller applications, such as super alloys as well as molybdenum metal making up a relatively smaller proportion of total use. Molybdenum is also used in chemical applications such as catalysts, greases and lubricants and pigments, although these also represent a small proportion of overall demand.
Supply increased strongly in 2017 but stagnated in 2018, with Roskill estimating that molybdenum supply reached 259kt, virtually unchanged from 2017’s production. Output from China, the world’s largest producer of molybdenum, and from the USA both crept higher, but production in Chile, the second-largest producer, fell. Production in Peru was effectively flat.
Molybdenum supply remains overwhelmingly a by-product of copper production. Roskill estimates that in 2018, around 72% of molybdenum mine production was as a by-product of copper mining. This level has been relatively unchanged since 2016 and indeed, Roskill expects to remain at around this level in 2019.
Supply growth in 2019 is expected to remain anaemic. Several major producers have guided towards either flat or lower production. At the same time, some macroeconomic indicators are pointing to a deterioration in short-term economic conditions. Demand is therefore not expected to grow as rapidly in 2019 as in 2018. With little growth expected in supply and in demand, the market tightness seen in 2018 should persist into 2019, which should provide some near-term support to prices.