OREANDA-NEWS. August 31, 2015. About year ago, Platts daily dealer molybdenum oxide assessment was at \\$13.15/lb. In fact, throughout August 2014 the price stayed above \\$12.95/lb, which seems unimaginable now when oxide struggles to hold above \\$6/lb.

Today, interest for purchasing oxide powder is increasingly slow and prices are being held back by the lack of spot purchasing. But when we look back at the same time a year ago, was it that different? Traders and producers were telling us that summer trade was thin, similar opinions we hear today.

In the summer of 2014 there was optimism that the return of consumers in September would see prices edge up back to \\$15/lb mark seen in June 2014. This anticipation is cyclical; after the summer holidays consumers always come back to the market and we see prices, which have been static all summer, move up — over August 2014, \\$13/lb was the support level.

Of course, looking back this didn’t turn out quite as expected. A lack of inquiries for September had sellers panicked and offering aggressively into the market. Looking over September, prices fell from \\$13.05/lb to \\$10.25/lb in one month.

It was also in September that the International Molybdenum Association held its annual conference: it was here that negative sentiment for prices was in full bloom, and market participants reported that single-digit prices looked likely before the end of the year and into 2015. Furthermore, talk that the Sierra Gorda mine in Chile was on track for production in early 2015 also had people looking at the material they held and trying to sell it as quickly as possible.

Fears that there would be excess molybdenum in the market created more panic among producers and traders alike. Indeed, there was no discrimination of where low price offers were coming from.

It was from this point molybdenum oxide escalated its descent and has not looked back. And, of course, even now little has changed in the market. Questions on Sierra Gorda production still hang over the moment, and after numerous delays the mine seems to be on track to deliver oxide powder to Asia in September adding to the supply glut we see now.

Consumers have been pretty much absent for most of the year, creating pressure on spot prices every time a mill issues a tender. Steel mill buyers have said they have never before seen the likes of the number of offers they receive for every tender.

One of the major changes this year has been the switch from Europe to South Korea for conversion contracts, seeing a lot less spot volume traded in Europe. In previous years Europe has dominated pricing and purchasing trends; in 2015 buying activity in South Korea has been a price driver.

It also appears to have been a structural change to the industry where mills are using less spot material and requirements are being met by flexibility in long-term contracts. There have been fewer tenders for spot material compared to previous years, but production at mills has not fallen by the same rate.

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With oil prices on the decline since 2014, we asked market participants at the start of 2015 how much impact this would have on oxide powder prices and demand. The overwhelming response was that with oil country tubular goods accounting for about 16,500 mt of molybdenum, compared to a total for the oil and gas industry of about 63,000 mt, impact would be limited.

At the start of the year, producers and traders both said the impact of low oil prices on molybdenum was yet unclear. Customers were telling them orders were still going ahead although suppliers to pipemakers in the US and Japan seemed to be feeling the impact faster than those in Europe. The Brent crude spot prices in September 2014 averaged \\$97.09 before falling to \\$47.76 in January 2015. Throughout 2015 the price has averaged \\$52.63 compare this with \\$108.56.

This month, producers and traders have told us they underestimated the impact oil prices would have on molybdenum. This, along with a slow down in global steel production, has seen a big drop in demand for oxide powder. At the beginning of the year molybdenum was at \\$9/lb. Now prices struggle to stay above \\$6/lb, so what are people predicting now?

The view from the market is that we will see more material before the end of the year and there is no reason to expect any price recovery anytime soon.