Molybdenum market growth positive over the long term
Molybdenum is widely used around the world in many markets and product forms, with the largest end-use market being the oil and gas industry and the largest product use being an alloying element in Molybdenum-alloy steels (constructional engineering steels). The markets are well diversified in applications and maturity, assuring a continuing demand for molybdenum. According to the International Molybdenum Association (“IMOA”), applications for molybdenum in high growth industry segments like renewable energy (wind turbine gears and shafts), transportation (turbo-charged engines), and construction (stainless steel rebar) will ensure that molybdenum will outperform other metals with anticipated growth rates above global GDP growth.
Demand for molybdenum has grown at an average annual rate of 4% over the past 50 years. IMOA, CPM Group and CRU Group have forecast that molybdenum will grow at a worldwide rate of approximately 4.5% per year to the year 2020, equating to roughly 220 million pounds (or 50% of present use) over that period. To meet this increase in demand, this will require one to two world class molybdenum mines coming into production in each of the next 9 to 10 years.
Growth in the molybdenum market is heavily influenced by steel production, as the steel industry accounted for nearly 70% of total demand in 2009. As can be seen in the figure below, stainless steels accounted for the largest share of total demand, at 26%.
On the demand side, the 2008 recession did not destroy the structural drivers that began during the first half of the past decade. Industrialization and urbanization trends in key emerging markets continue; large-scale infrastructure projects still need to be built around the world; anti-corrosive, strong, and light weight materials are required throughout the energy supply chain; and demand from emerging applications continues to provide new markets for molybdenum-bearing products.
China’s Role in the Molybdenum Market
While China was a major exporter of molybdenum in the past, beginning in 2004, the Chinese government deliberately reduced molybdenum supply to the rest of the world through production curtailments, export taxes and export quotas. As local high-cost mines closed down near the end of 2008, China started importing large quantities of molybdenum from North and South American producers (China Moly, Metallurgical Consultants and Analysts LLC). This increase in imported molybdenum is also driven by the numerous infrastructure and urbanization projects planned through 2025, and the availability of products at lower costs than their production costs. China produced roughly 34% of the global molydenum mine supplies in 2009 (CPM Group). The demand for molybdenum in China will continue to be driven by the Chinese steel industry. During the first half of 2010, China’s crude steel production increased 21.1% to 323 million tons and reached 620 million tons by year end, an increase of 9.3%. At the same time, Chinese stainless steel production grew 23% to 1.2 billion tons. In China, 76% of the total molybdenum produced and imported is used in the steel industry. The continued development of the energy sector and industrialization of China will continue to require large quantities of steel.
