As the energy and shipbuilding industry continues to prosper; a large proportion of molybdenum faces declining grade problems as copper-associated ores, and there is still great uncertainty about the launch of new mines, so the molybdenum price center is expected to continue to rise.
The Zhitong Finance App learned that Guojin Securities released a research report saying that on May 16, Zijin Mining issued an announcement announcing that the production of mineral molybdenum and copper in 2025 will be 1/1.22 million tons, while the production range of mineral molybdenum and mineral copper in 2028 will be 150-160/25-35,000 tons, respectively. Zijin Mining revealed in its 2023 report released on March 23 that it expects production of molybdenum and copper minerals in 2025 to be 1.6 and 1.17 million tons; the production guidelines released this time are 1/1.22 million tons, with adjustments of -0.6/+50,000 tons, respectively. As the energy and shipbuilding industry continues to prosper; a large proportion of molybdenum faces declining grade problems as a copper-associated mine, and there is still great uncertainty about the launch of new mines, and molybdenum prices are expected to continue to rise; as prices rise, scarce molybdenum resource targets are expected to fully benefit, and gold and molybdenum shares (601958.SH) are recommended.
The steel market boom continues, and molybdenum prices continue to rise
From January to April 2024, the volume of molybdenum iron steel was 55,000 tons, +135% year-on-year; the reason for the higher year-on-year increase, the low base effect from January to March 2023 was taken into account, but compared to the same period in 2021-2022, the volume increases also reached 77%/55%, respectively. As of May 17, the price of molybdenum concentrate (45%) was 3,695 yuan/ton, with weekly and monthly increases of 1% and 12%.
The operating rate of the industrial chain is high, and there is little room for subsequent improvement
As of May 10, the operating rates of molybdenum concentrate, ferromolybdenum, and molybdenum oxide were 76%, 69%, and 95%, respectively; they were at high levels in the same period in history. Guojin Securities believes that as supply and demand continue to improve and prices continue to rise, there is relatively limited room for supply growth since the current operating rate of the industrial chain has reached a historically high position.
Inventory is shifting to elimination
As of May 10, domestic stocks of molybdenum concentrate, ferromolybdenum and molybdenum oxide were 5170/10300/1470 tons, respectively, and the removal ranges from the peak (mid-February 2024) were 13%, 21%, and 58%, respectively. Guojin Securities believes that with the boom in downstream demand, the start of the molybdenum industry chain is facing bottlenecks, and the industrial chain inventory is moving into a stage of passive elimination.
The progress of the Shapinggou molybdenum mine still needs attention
Zijin Mining completed the acquisition of 84% of the shares in the Shapinggou Molybdenum Mine in Jinzhai in October 2022. The construction period of the project is 4.5 years, with a total investment of 7.2 billion yuan, including a construction investment of 6.4 billion yuan, with an average annual production of 272,000 tons of molybdenum after delivery; the Anhui Provincial Environmental Department accepted the “Environmental Impact Report of the Shapinggou Molybdenum Mining Project in Jinzhai County, Anhui Jinsha Molybdenum Industry Co., Ltd.” in early April 2024.
Molybdenum steel production is booming, and terminal demand is good
In terms of direct demand, the cumulative year-on-year growth rates of molybdenum steel types 316 stainless steel, duplex stainless steel, and medium and heavy plate production in March 2024 were 6%, 58%, and 3%, respectively. In terms of terminal demand, the cumulative year-on-year growth rates of oil and gas and chemical manufacturing investment in March, which account for relatively high demand for application scenarios, were 12% and 7%, respectively. Thanks to the continued boom in shipbuilding and energy (thermal power, oil and gas and chemicals) and steel structures, Guojin Securities expects global demand for molybdenum to reach 345,000 tons in 2026, with a 3-year CAGR of 5%.
There is still great uncertainty about the launch of new mines, and molybdenum supply and demand are expected to continue to be tight
The main overseas incremental projects are the QuebradBlanca copper mine phase II project. The main domestic ones are the Jide molybdenum mine, the Julong copper mine phase II controlled by Zijin Mining, and the Shapinggou molybdenum mine. According to the latest production guidelines announced by Zijin Mining, according to Guojin Securities estimates, the global supply of molybdenum in 2026 will be 295,000 metal tons, with a 3-year CAGR of 3%. Molybdenum supply will be tight for a long time, with gaps of -4.1/-4.3/-50,000 tons, respectively, and molybdenum prices will gradually rise.
Risk warning: Molybdenum supply exceeds expectations; demand falls short of expectations; element substitution risk.