Molybdenum

Molybdenum Global Market Outlook:

Market Overview

Global Molybdenum demand: 306 KT (2022 E)

CAGR of 4 percent (2021–2025)

Market Drivers:

• Steel industry

• Automotive industry

• Oil & gas and petrochemicals

Molybdenum Regional Market Outlook

• China accounted for almost 40 percent of global molybdenum mine production in 2021  and more than 30 percent of the global consumption

• Chile is the second largest producer of molybdenum globally and the largest exporter of Molybdenum ores and concentrates

• China is the largest exporter of refined Molybdenum, while EU, US, Japan, and South Korea are the biggest importers

Global Market Overview: Production and Consumption

• Molybdenum consumption is anticipated to increase globally between 2021 and 2025 at a CAGR of 3 to 4 percent due to infrastructure demand from growing nations like China and India. The fluctuation in oil prices, which causes delays in the growth programs undertaken by oil and gas corporations, would partly offset the demand. Since the supply market is not expanding quickly, the molybdenum market is anticipated to experience a deficit for at least three or four years.

• Global molybdenum production fell by 4% in Q1 2022 when compared to the previous quarter, and by 7% when compared to the same quarter the previous year. When compared to the previous quarter, global use of molybdenum increased by 9% in Q1 2022 , representing a 2% decrease when compared to the same quarter the previous year.

• China remained the largest producer of molybdenum, with a 2% decrease compared to the previous quarter but a 6% increase compared to the same quarter last year. China remained the largest user, with a 17 percent increase over the previous quarter and a 3 percent increase over the same quarter last year.

Porter's Analysis on Molybdenum

Supplier Power

• Supplier Power is medium to high as top 5 suppliers account for ~47% of the total global molybdenum production

• This will be offset slightly by commoditized nature of molybdenum at a global level

• This trend is not expected to change in the upcoming years

Barriers to New Entrants

• Production of molybdenum is capital intensive process and requires high upfront cost

• The existing players also have robust distribution networks whereas the new players must make significant investments for the same

• Large economies of scale and requirement of technical expertise deters new entrants and hence barriers to new entrants in the market is high

Intensity of Rivalry

• The intensity of rivalry is expected to be high in upcoming years among the mining companies.

• Most of the molybdenum producers are backward integrated, having their own source of raw materials

• This would lead to further intensity of rivalry among the market suppliers

Threat of Substitutes

• There are very few substitutes for molybdenum in its major application in steel and cast iron

• Potential substitutes for molybdenum include:

1. Boron, chromium, niobium (columbium), and vanadium in alloy steels

2. Tungsten in tool steels

3. Graphite, tantalum, and tungsten for refractory materials in high-temperature electric furnaces

4. Cadmium-red, chrome-orange, and organic- orange pigments for molybdenum orange

• Overall the threat of substitute is medium to low

Buyer Power

• Buyer power is medium owing to main use in steel and alloys products. This is slightly offset by demand from different types of end use industries ranging from power to chemicals

• No sector has very high buying power while procuring Molybdenum

Cost Structure Analysis: Molybdenum

• Site Production and Delivery : These costs are the major components of the molybdenum cost structure. The site production depends on the type of mine, topography, environmental conditions, level of automation and labor employed at the site

• Treatment Charges: Treatment charges typically include tailing and other treament charges along with waste removal, waste management, etc. The charges may also vary depending upon the level of molybdenum concentrate obtained

• DD&A: Depreciation, depletion and amortization charges vary on the life of mine, type of mine and region of operation. The accounting standards also impact the cost component.

• Other Fixed Costs: Certain overheads such as administration costs, royalties (if any) and credits offtake. These costs vary depending on the country of operation