According to commodities economist Ross Strachan at UK based Capital Economics, with global molybdenum production due to increase, and a slowdown in demand on the horizon, prices are set to fall in 2013.
Stronger than expected 2013 economic growth in China the world's biggest consumer of the steelmaking input could be positive for molybdenum prices, but Strachan cautions against assuming such a correlation.
Mr Strachan told BNamericas that if Chinese growth is not domestically driven, it would merely displace an order from a manufacturer elsewhere and this will have no net effect on prices adding that China's shift away from commodity-intensive growth and the world's ample spare molybdenum capacity would offset any upward pressure on prices.”
Mr Strachan forecasts that prices will slip to USD 9.50/lb by end 2013. The London Metal Exchange price has averaged USD 12.84/lb in 2012 to-date, down from its average of USD 15.59/lb in 2011.
Chilean copper commission Cochilco has published a new study into the global molybdenum market, estimating a more bullish end 2013 price level of USD 15/lb as demand starts to grow faster than supply.
Cochilco said that even so, the molybdenum market will show respective surpluses for 2012 and 2013 of 10,400 tonne, 6% higher than the 2011 surplus and 9,500 tonne.
Cochilco said that on the demand side, "risks persist" in Europe despite EU efforts to mitigate the impacts of sovereign debt woes and the overall weakness of the financial system. Combined with a growth slowdown in China and weak growth in the US and Japan, the outlook for global moly demand growth for 2012 and 2013 is 3% and 6%, respectively.
