The molybdenum market is expected to weaken further before the end of the year, according to China-based molybdenum producer and exporter Jiangsu Shunchi Tungsten & Molybdenum Products.

Molybdenum concentrate prices are “likely to fall further in the last quarter”, Ding Shun, chairman of Shunchi, said in a recent interview.

“Many miners will face a tighter liquidity situation in the fourth quarter and may be forced to undersell their concentrates. In other words, even cost levels may not provide any solid support,” Ding said.

The chairman predicted prices for molybdenum concentrate may fall below 1,400 yuan ($228) per tonne before the year end.

Molybdenum concentrate prices have fallen nearly 20% this year due to ailing demand from smelters.

On Wednesday October 18, molybdenum concentrate was trading in the1,440-1,490 yuan per tonne range, compared with a year-high of 1,780-1,800 yuan per tonne on January 11.

Current mining costs for molybdenum concentrate is 1,500-1,550 yuan per tonne for small-to-medium sized miners and about 1,400 yuan per tonne for major miners, some market participants said.

The overall market situation is “dangerous”, according to Ding, due to the threat of oversupply.

“Supply and demand is imbalanced and China has not made any efforts to curb expansion of molybdenum capacity,” he said.

Shunchi has produced about 600 tonnes of molybdenum metal so far this year, compared with about 700-800 tonnes last year. Yet prices are lower this year, Ding said.

The company plans to produce 1,000 tonnes of molybdenum metal this year, half of its annual capacity of 2,000 tpy.

Shunchi has been investing in new technology.

“Many small smelters cannot even survive, as they don’t keep up with developments in technology,” he said.

Ding entered the molybdenum industry, following in the footsteps of his father, who began working in the sector in the 1970s. Over the past three decades, Ding, who studied chemistry at university, has used his scientific knowledge to revive and upgrade the family business.

As the world’s biggest molybdenum producer in 2012, China produced 93,894 tonnes last year, accounting for 39% of global output. It was also the biggest consumer last year with an annual consumption of 83,098 tonnes.

The world’s molybdenum output reached a record high of 240,313 tonnes last year, up 1.6% from the previous year, according to International Molybdenum Assn (IMOA).

Global consumption of the metal was 236,276 tonnes in 2012, down from a record high of 236,821 tonnes in the previous year, according to IMOA.