Interesting data point for the molybdenum market this week.
Peru reported its metal production figures for January to May. And noted that moly production plunged 21% during the period, to 5,869 metric tons.
The fall is potentially significant for the market. Only a handful of nations produce significant moly, and in 2012 Peru was the world’s fourth-largest output centre.
The odd thing is, the drop in moly production was a one-off for the Peruvian mining sector. Production of copper, zinc, and lead in the country increased during the same period.
No official explanation was given for the decline. But it looks like it could be producers moving away from molybdenum-rich ores. A move that would make sense, given spot moly prices have been falling steadily since the beginning of 2013. Now at their lowest level since early 2009, below $10/lb.
If that is the case, this would be a sign of “low prices curing low prices”. Global producers may look to mine less molybdenum by-product, in favour of copper or lead-zinc rich ores. Until prices improve.
Here’s to smart production decisions,
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