Executive Interviews

Asian Metal: Hello Ms.Yue, thank you for accepting this interview. First of all, please make a brief introduction of your company.

Ms. Yue: Our company is headquartered in High-tech Zone of Xi’an, Shaanxi Province, with three factories respectively located in Lantian County and Shangluo City. Our business scope includes molybdenum oxide roasting, molybdenum chemical industry and molybdenum metal producing. We purchase molybdenum concentrate as raw material to produce the intermediate products include molybdenum oxide, ammonium molybdate, molybdenum powder, and to the end product which is molybdenum rod for steel-making. The company has a processing capacity of 1,800tpy of molybdenum metal and stays in the leading position in molybdenum industry in terms of technology research, development and sales both at home and abroad. It’s a high-tech enterprise with the characteristics of specialization, refinement, specialty and innovation.

Asian Metal: The energy crisis in Europe is getting worse due to the conflict between Russia and Ukraine, resulting in continuous production suspension of steel mills. However, European ferromolybdenum prices still rose siginificantly in the second half of 2022. What do you think is the main reason for this situation?

Ms. Yue: Russia-Ukraine conflict brought energy crisis in Europe, but many European countries have corresponding emergency measures for this, and they are actively looking for alternative channels. Despite the continuing shutdowns of steel mills in Europe, these mills, as far as we learn, do not all consume molybdenum. In fact, the demand for molybdenum of molybdenum-containing steel products has not decreased significantly. At the same time, molybdenum concentrate in South America, the main source of raw materials, had a significant reduction in 2022, especially in the second half of 2022, molybdenum oxide producers in South America reduced their supply to Europe significantly. Since last September, with the big release of China's molybdenum demand, the contradiction of spot shortage in European market began to accelerate and escalate, and the price rose sharply. Until the end of 2022, the surging situation remained unchanged.

Asian Metal: 2022 is also a year of complete explosion for Chinese molybdenum market and the prices of all kinds of molybdenum products in China basically doubled YoY. What do you think is the main reason for it?

Ms. Yue: By the end of 2022, China's molybdenum prices had risen to a 15-year high level and kept touching a historic record. We think the main reason is that the supply keeps tight and the demand keeps going strong. From the demand aspect, in 2022, the demand for ferromolybdenum from stainless steel industry increased significantly. According to our statistics, the purchase volume of ferromolybdenum from steel mills all stayed at above 11,000tpm for the whole year, up by about 17% YoY. From the aspect of supply, the release of new production capacity of molybdenum concentrate is delayed, so the prices continue rising, leading to the depletion of social inventory. Besides, the import quantity sharply reduces because of the inverted price gap. According to the customs data, the import volume of molybdenum raw materials from January to November this year decreased by about 24% compared with the same period in 2021. Molybdenum raw material supply is short and it is difficult to find goods in spot market, resulting in frequent price surge of molybdenum prices since August 2022.

Asian Metal: What’s your expectation for the molybdenum market in the first quarter of 2023?

Ms. Yue: As a typical war metal, molybdenum is one of the main strategic materials in the field of military industry. Molybdenum-containing steel products could be used to manufacture gun barrels, tanks, armor and other military equipment. Due to the ongoing conflict between Russia and Ukraine, we expect that the military industry of the European Union and Russia is bound to stimulate the demand for molybdenum in 2023 and the market would keep seeing the upward trend of molybdenum prices. In the first eight months of 2022, the average price of European ferromolybdenum 65%min stayed at around USD43/kg Mo, but by the end of the year, it increased to around USD70/kg Mo. The overall trend of rising prices in international market driven by decreasing supply and increasing demand should be the main theme in the first quarter of 2023. In China, with the rapid coverage of national immunization, the resumption of work and production would be faster and faster. In the first quarter of 2023, the macroeconomic and business environment would be obviously improved. We are optimistic that molybdenum supply and demand would continue to be tight and strong, and the prices would continue rising in the first quarter. The demand in the first quarter of 2023 may increase by 17% YoY. By the end of 2022, the prices of molybdenum concentrate 45%min increased to around RMB4,300/mtu (USD29/lb Mo) EXW D/P, and the prices of ferromolybdenum 60%min moved up to RMB295,000/t (USD73.1/kg Mo) EXW D/P. We estimate that in the first quarter of 2023, the prices of molybdenum concentrate 45%min would increase to about RMB4,500/mtu (USD30.3/lb Mo), and those of ferromolybdenum 60%min would surpass RMB300,000/t (USD74.3/kg Mo).

Asian Metal: In face of the increasing molybdenum raw material prices, the prices of ferromolybdenum could be accepted by steel-mills easily in the past year, while the price transmission to the downstream molybdenum chemical industry and molybdenum deep processing seems not to be smooth. How do you view the current situation that the downstream molybdenum industry has limited deals?

Ms. Yue: Steel mills’ demand for ferromolybdenum accounts for about 80% of the total demand for molybdenum and the rest accounts for molybdenum chemical industry and molybdenum processing. The price change in the above two industries would take place slower than that of ferromolybdenum. In molybdenum chemical industry, because of the long process, the prices passively follow the price change of raw materials. The downstream industries that take molybdenum chemicals as raw materials such as catalyst industry, couldn’t raise the end product prices in time. In particular, there must be a period of time for end users to adjust to the sharp price increase. Therefore, it is a normal phenomenon that molybdenum chemical and deep processing markets witness scarce deals for a certain period of time.

Asian Metal: Would your company focus on the domestic or international market in 2023? Would you see a significant increase in sales?

Ms. Yue: Our company has been deeply engaged in the molybdenum metal market for more than ten years. We mainly focus on the sales of molybdenum metal on the international market, and the international and domestic market share is about 80% and 20%. We expect to produce about 150tpm in 2023, and would continue to expand the share in the international market.

Asian Metal: What’s your plan for the next three years in molybdenum market? Would you launch new molybdenum projects?

Ms. Yue: We plan to continue to increase the investment in the research and development of new technologies and cooperate with downstream users to do customized products so as to meet the different needs of customers. We would maintain the existing production capacity unchanged and keep increasing the operating rate as much as possible. We have no plan to launch new molybdenum projects.

Asian Metal: Thank you for your sharing. We wish Head-Moly a thriving business in 2023.

Ms. Yue: Thanks for Asian Metal to provide such a professional platform, let’s move forward to a brighter future!