There’s been a lot of concern lately over slowing Chinese demand for commodities. But news this week shows that one metal is bucking that trend — and seeing an explosion of demand in China so far this year.
As reported by Platts on Thursday, data from China’s General Administration of Customs showed that molybdeum imports into China are surging. With May imports alone up 131% as compared to the same month in 2015 — to 1,812 tonnes.
And that’s not a one-off occurrence. In fact, China’s moly imports have been a tear throughout 2016 so far. With total shipments into China this year up 89.4% for the January-May period, to 8,851 tonnes.
In this case, the rise is coming for imports of molybdenum in its raw, less-upgraded forms — including concentrates and oxides. With the reason for the surge apparently being big differentials in the price of Chinese moly supply, as compared to international sources.
That makes it more profitable for Chinese producers of advanced materials like ferromolybdeum to buy input oxide and concentrate from producers abroad. With the customs data showing that China has been importing significant quantities of concentrate from Chile and Mongolia, with oxide coming primarily from Chile, Mexico and the U.S.
The underlying cause for all this action is marked strength in the global molybdenum market. With prices for oxide having hit an average of $7.333 in May — the highest level seen in a year.
The really interesting thing is, the recent trading suggests Chinese molybdenum producers are running at much higher costs than the global average. Suggesting that if demand for the metal stays relatively strong, we could see a continued opportunity for imports into this critical market.
Watch for more data on China’s imports, and keep an eye on the moly price to see if the recent gains continue.