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Gold/Mining/Energy : Stuhini Exploration
STU.V 0.1300.0%Feb 7 12:13 PM EST

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From: pstad602/3/2023 8:39:54 AM
   of 128
 
Asia ferromolybdenum breaches $95/kg on strong demand as supply dwindles

HIGHLIGHTS

Asia Ferromolybdenum trades as high as $98.85/kg

Conversion facilities booked up until March: trader

Supply expect to remain tight in first quarter


Asian ferromolybdenum prices hit a new peak of $94-$96/kg, the highest level since Platts Asia
weekly pricing began, jumping $19.75/kg, or 26%, on the week, amid heightened demand from
China and continued market tightness arising from supply disruptions.

The S&P Global Commodity Insights Ferromolybdenum CIF Asia Weekly price moved up to a
record $94/kg-$96/kg Feb. 2, from $75/kg-$75.25/kg Jan. 26.

Prices surged in the week to Feb. 2 as Chinese demand returned stronger than expected
following the Lunar New Year holidays, market participants said, further constricting the already
tight global ferromolybdenum complex driven by short covering in Europe.
"The market expected China to return strong, but not at the levels we are seeing now. We were
originally hopeful that China might export some ferromolybdenum out as prices in Europe are
much higher but domestic demand returned stronger than expected with little room for export,
" a North Asia trader said, adding that in the previous week ferromolybdenum was trading at
a $10-$15 discount to Europe, but prices had quickly risen in Asia with little room for arbitrage.

Market participants largely expect demand in China to remain strong, with participants reporting
over 10,000 mt of ferromolybdenum traded in the month of

January, higher than previously expected, with majority of the market away for one or two weeks
for Lunar New Year.

"Returning on Saturday from the festive break, prices were originally driven by high EU prices
but currently the surge is driven by domestic demand, which has taken us by surprise too," a
Chinese trader said, adding that domestic prices had risen sharply over the week, with trades
climbing from Yuan 298,000/mt ($44,298/mt) to well over Yuan 380,000/mt and with bids as
high of Yuan 390,000/mt heard rejected.

In the week to Feb. 2, offers were heard to be in the range of $91-$100/kg, with most deals
heard happening in the same range. This was still slightly lower than European prices with
Platts, part of S&P Global Commodity Insights, assessing Ferromolybdenum 65% European
in warehouse Rotterdam price at $102-$106.5/Kg on Feb. 1.

"Units are tight now, nobody wants to sell...as it will be hard to replace units sold with conversion
capacities booked till March -- if you need units you have no choice but to pay up," an international
trader said.

"The conversion premium is good now, and with such high prices we should by right see more
supply in the market. However due to the lack of prompt conversion capabilities and low inventory
levels with the majority of the traders destocking over the November-to-January period, there is
a void of cheap offers in the market," another international trader said, echoing the view of a tight
global supply complex.

Prices are expected to stay elevated with a confluence of market factors constricting supply
flows for ferromolybdenum such as stronger-than-expected demand from the offshore sector
and continued upstream molybdenum concentrates disruption in Chile and Peru, coupled with
historically low inventory levels as prices hit an all-time high, market sources said.
The Platts Daily Dealer molybdenum oxide assessment was $36.50/lb-$39/lb, with a midpoint
of $37.75/lb Feb. 2., up from $36.50/lb-$37/lb Feb 1, data from S&P Global showed.

Market participants also reported further upside potential for molybdenum oxide prices as at
current prices, the ferromolybdenum conversion premium remains well into double digits.

During Asian trading hours Feb. 2., there were reports of trades within the $38-$39/lb range,
higher than the $36-$38/lb deals reported Feb 1.

Continued upstream disruptions

Molybdenum, typically a byproduct of copper mining, is also seeing the impact of unexpected
disruptions in the copper mining sector in South America, on top of an expected structural
deficit in 2023.

A fire at Chile's Ventanas port in December 2022 hit shipments of molybdenum-producing mines
including Andina and Los Bronces, and there has been no confirmation on when operations will
return to normal. Seasonal swells along the Chilean coast have also compounded worries on
further shipment delays.

Meanwhile, protests in Peru following the ousting of former president Pedro Castillo have shown
little signs of easing, forcing some mines to halt production, including Glencore's Antapaccay and
MMG's Las Bambas. Concerns loom on whether the protests will spread to other regions and
cause further disruption, leading to more volatility in the molybdenum market.


Source:

spglobal.com
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