In a new note, BMO Capital Markets points out molybdenum has been one of the strongest base metal performers in the recent past with the latest spot assessments at ~$32 per pound or $70,500 per tonne – more than 50% higher than November-end levels.
Molybdenum is often produced as a byproduct of porphyry copper mines with global production worldwide of 300,000 tonnes primarily destined for the steel industry.
BMO says with demand conditions still relatively muted due to softness on global steel markets output, the price surge for molybdenum is mainly driven by supply issues:
“With the ongoing output challenges at Codelco, responsible for ~50% of Chilean molybdenum supply, Chilean output remains well below the five-year average, though November did mark a return to y/y growth.
“Meanwhile, Peru’s output is also down y/y, while other key primary producers such as China and the U.S. are also facing production…
