Subdued LME copper prices set to affect future moly oxide supply: Climax Molybdenum

Subdued copper prices are expected to weigh on molybdenum supply in the coming years, Kevin Pritchett, Climax Molybdenum's director of marketing, said in a panel discussion at the SMR Stainless Steel conference in Rome on Sept. 18.

"Supply is still a challenge, especially from Western mines," Pritchett said, noting that most of the "easily accessible deposits have already been exploited," leading to exploration efforts by Chinese miners in remote locations, such as Inner Mongolia, where all mining infrastructure would have to be built out.

Molybdenum is mostly recovered from copper mines as a byproduct, mainly in South American countries like Chile and Peru, but some supply also is extracted from primary production. Climax, part of Freeport-McMoRan, is the largest individual molybdenum producer globally, producing 82 million lb Mo in 2023, according to the company.

Global molybdenum exploration budgets totaled $16.5 million in 2023, down sharply from $21.4 million in 2022, Market Intelligence data showed.

"This new supply is not going to come fast or cheap," Pritchett said. "We've said for some time that most of the growth in supply would come from copper-molybdenum mines because the world needs to electrify and decarbonize, so it's going to need more copper, but because the [London Metal Exchange] copper price has been somewhat depressed, these new projects are not coming online very quickly, so it has a knock-on effect on molybdenum."

The LME copper cash settlement price was $9,242/t on Sept. 17, down from a 2024 peak of $10,857/t on May 20. Market discussions over future copper price direction at the time were fueled by hedge fund manager Pierre Andurand, who had bullishly suggested that copper prices could reach $40,000/t over "the next four years."

"Chinese demand for molybdenum increased by 16% year over year in the first half of 2024, but [domestic Chinese] supply was only up 4%-5%, so they continued to be a net importer of molybdenum despite the fact that they are the world's largest producer of molybdenum," Pritchett said.

"The increase that they have had has mostly been from byproduct mines, some of the few copper-molybdenum mines you have in China, as well as some smaller, marginal high-cost mines, where in this price environment, they can operate and make a few US dollars per pound [of margin], but typically these smaller mines only produce when you have this price level."

The benchmark Platts global molybdenum oxide assessment had averaged $21.146/lb Mo in 2024 as of Sept. 17, down from an annual average of $24.191/lb Mo in 2023, but up sharply from a recent annual average low of $8.684/lb Mo in 2020.

Platts, part of S&P Global Commodity Insights, assessed molybdenum oxide powder at $21.325/lb Mo on Sept. 17, down 10 cents from Sept. 16. However, spot deals were reported at $21.55/lb Mo basis in-warehouse Busan and $21.63/lb Mo CIF Busan on Sept. 18 on higher buying interest amid the end of the mid-Autumn Festival holiday in China.