Armenian News-NEWS.am starts a weekly series of articles on commodity markets. «Commodity weeks» will asymmetrically extend from Wednesday to next Tuesday, to stay in touch in the weekends. The first weekly series will cover one of key export goods for Armenia, molybdenum. Every business day a high-rated international or local expert or market participant will share vision on market trends and sentiments. «Molybdenum week» starts with the observations of the Director of Research at the US-based CPM Group, Catherine Virga.
CPM Group expects China to remain a net molybdenum exporter over the next couple of years, she said in an emailed comment. However, net exports may remain well below historical levels and are unlikely to exceed 10 million pounds (about 4.5 thousand tons) per year.
China is the largest steel producing and molybdenum consuming country in the world. According to the data of World Steel Association, China accounts for around 30% of global production. This leads to a large consumption of molybdenum, again with 30% share in global consumption, according to the International Molybdenum Association (IMOA). Global molybdenum prices are largely driven by Chinese demand, particularly within the steelmaking industry. Global steel production is another area, being by far the principal user of molybdenum (around 70%, according to IMOA). A smaller, but still significant end user is the chemical industry.
Domestic steel producers in China, expects C. Virga, will continue to work toward building capacity for value added products and especially steel, which are supportive of molybdenum demand.
“Growth in crude steel output is expected to slow from levels seen during the last decade with reduced growth in new capacity,” she said.
Another significant market for Armenian molybdenum exporters is Germany, where a large part of Armenian ferromolybdenum is shipped. According to the most recent data available, published by the US Geological Service (USGS), in 2008 Armenia had been the third largest FeMo exporter to Germany, with exports equaling 2,210 tons or around 13% of total German imports. (Armenian statistical data do not provide a breakdown by country on the exports of FeMo. An aggregate is given for each export destination on ferromolybdenum, ferrotungsten and rhenium salts. However, FeMo is notably dominant in production and exports).
The performance of German steel industry gives important signs for the prospects of Armenian exports. Commenting on a possible influence of the instability in euro zone on molybdenum consumption in Germany, C. Virga told that recently there has been a reduction in short term and spot contracts in both the steel and the chemical industry in Europe.
“Market participants are managing their inventories more closely due to increased price volatility across the industrial metals complex,” she added.