China’s special alloys market still moves in downward direction

Against the background of slack market demand for special alloys, prices of both ferromolybdenum and ferrovanadium in the Chinese market registered an overall drop during the past week. Given the sharp fall in production costs, a further price slide is very likely in the ferromolybdenum market in the future. Meanwhile, it also appears difficult for the domestic ferrovanadium market to get rid of its current sluggishness in the short term.

The Chinese ferromolybdenum market posted a considerable fall over the past week. By the end of last week, the mainstream prices of ferromolybdenum in Jingzhou had decreased RMB 10,000/mt ($1,466/mt) to the range of RMB 138,000-142,000/mt ($20,235-20,821/mt), while the market prices of molybdenum concentrate (45 percent) were down RMB 150/mtu ($22/mtu) week on week to RMB 2,100/mtu ($308/mtu). Meanwhile, European market prices of ferromolybdenum (60 percent Mo) are at $29-30.5/kg Mo, while prices of molybdenum oxide in this market are at $12.25-13/lb.

Retaining its previous bearishness, Chinese ferromolybdenum prices recorded a strong, continuous slide in the various leading markets in the past week. In recent days, most mills with enough materials in hand have seemed uninterested in making purchases. Moreover, considering the recent declining tendency in the molybdenum alloys market, many mills and traders prefer to wait and see how the market develops in the coming period. In addition, market prices of molybdenum concentrate have seen a decrease of RMB 150/mtu ($22/mt) during the past week, resulting in a reduction of RMB 10,000/mt ($1,466/mt) in the production costs of ferromolybdenum. Some market players have also disclosed that there are some even cheaper molybdenum concentrate materials available in the current market. Generally speaking, China's domestic ferromolybdenum market is expected to go down further in the near future under the impact of the decreased prices of raw materials as well as the insufficient demand levels for ferromolybdenum.

Meanwhile, the Chinese ferrovanadium market speeded up its downward movement during the past week. Domestic quotations of ferrovanadium (50 percent) have declined by RMB 8,000/mt ($1,173/mt) to the range of RMB 95,000-10,000/mt ($13,930-14,663/mt), with vanadium pentoxide (98 percent flakes) down by RMB 8,000/mt ($1,173/mt) to RMB 88,000-90,000/mt ($12,903-13,196/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 €25-26/kg.

As a result of the continuous slide in the domestic finished steel market, the local ferrovanadium market continued to maintain its softness throughout the past week. In the context of the slack demand from mills, most mills have slashed their purchase prices considerably so as to drive down the spot prices of ferrovanadium supplies in the market. On the other hand, some producers are still in possession of a certain amount of high-cost materials which they have been unable to sell at the current price levels, while traders also have some high-price materials in hand. Consequently, due to the relatively strong inventories of high-price materials, plus the bearish demand from end-side users, it is very difficult for market inventory to see efficient consumption in the short term. Looking at the current situation, with no improvement on the demand side, most players seem pessimistic as regards the future trend. The local ferrovanadium market is expected to decline by a small margin in the coming period.