Ferromolybdenum prices in China see a sharp decline

Over the past week China's domestic special alloys market has continued its downward movement. Due to the extremely slack trading in the ferromolybdenum market, mills' purchase prices have again driven down the overall market prices in the past week. Meanwhile, some ferrovanadium producers have called a halt to their production operations; however, producers' inventories are in general at relatively high levels.

The Chinese ferromolybdenum market failed to see a halt to its downward movement in the past week. By the end of last week, the mainstream prices of ferromolybdenum in Jingzhou had decreased RMB 4,000/mt ($587/mt) to the range of RMB 134,000-136,000/mt ($19,648-19,941/mt), while the market prices of molybdenum concentrate (45 percent) were down RMB 50/mtu ($7/mtu) week on week to RMB 2,000-2,050/mtu ($293-301/mtu). Meanwhile, European market prices of ferromolybdenum (60 percent Mo) are at $27.5-29.5/kg Mo, while prices of molybdenum oxide in this market are at $12-12.5/lb.

Against the background of very poor levels of commerical activity in the past week, ferromolybdenum prices in the Chinese market have remained on their sliding trend. It is reported that some domestic mills have already lowered their purchase prices to the level of RMB 130,000/mt ($19,062/mt), which will likely cause most ferromolybdenum producers to incur losses. Moreover, considering the rapid drop in market prices, most mills and traders have adopted a cautious approach to purchasing activity, leading to the slack trading performance of recent days. In addition, following the continuous price decrease in the international market, the low prices of molybdenum oxide in the European market have again caught the eye of domestic ferromolybdenum producers. At present, prices of molybdenum oxide in the international market are down to $12/lb, and some Chinese ferromolybdenum producers have stated that they would start purchases of molybdenum oxide again once international prices fall to $10/lb or so.

Meanwhile, the Chinese ferrovanadium market continued to go down during the past week. Domestic quotations of ferrovanadium (50 percent) have declined by RMB 5,000/mt ($733/mt) to the range of RMB 90,000-95,000/mt ($13,196-13,930/mt), with vanadium pentoxide (98 percent flakes) down by RMB 3,000/mt ($440/mt) to RMB 85,000/mt ($12,463/mt). Meanwhile, in the international market, quotations of vanadium pentoxide (98 percent flakes) in Europe are at $6.7-7.5/lb, while market quotations of ferrovanadium (V70-80%) are down to €23.5-24.5/kg.

Over the past week, certain domestic mills have in succession issued their purchase prices for ferrovanadium, most of which are at relatively low levels. For example, a northern-based mill has reduced its ferrovanadium purchase prices below the level of RMB 90,000/mt, lower than the general cost level of the ferrovanadium producers. Currently, some ferrovanadium producers in Jingzhou, Jiangzu, Hunan, and Hubei have suspended their production operations, but still hold relatively high inventories in their stocks, which may help drive ferrovanadium prices down further. According to the current situation, it seems difficult for domestic ferrovanadium prices to halt their sliding trend, and it appears to be only a matter of time before market prices drop below RMB 90,000/mt.