The recent upticks in noble alloys prices may not continue into the year-end, and may turn back to the downside in 2016 without support from demand, market participants have warned.

Ferro-molybdenum and molybdic oxide prices, for example, have reacted to the news of further cutbacks at Freeport McMoran, with relatively robust rises in recent days.

Indeed, ferro-molybdenum gained further ground on Wednesday December 16, climbing to $13.40-13.65 per kg, from $13-13.50 previously, while oxide remained at $5.10-5.30 per lb.

With the possibility of decreasing output at steel producers looming, and with large inventories still available, participants have cautioned against putting too much faith in a major uptick.

There may be room for further small rises in oxide prices as 2016 begins, a trader said, but these are likely to be led by those people with large positions who want to mitigate their losses, rather than any further fundamental reason.

“Quite a lot traders have inventory priced substantially higher than the existing market. If you have a 200-tonne position priced at $6 or higher, buying at $5 isn’t such a bad idea,” the trader said.

“Even if there’s not much demand, people are tired of making losses… they would prefer to be buyers instead of sellers, even if they have stock themselves, to prop the price up,” he added

Likewise, ferro-vanadium prices have held fast at $13.30-13.80 per kg in response to the absence of various players in the spot market, but demand has yet to grow.

“Hopes are not high for next year for any of the alloys. The situation in China won’t really change,” a distributor said.

Cheap Chinese steel will still be readily available, he said, and demand for alloys in Europe will suffer as steel producers there find themselves forced to reduce output.

“They don’t make money because the base steel price is so low…they have to make cutbacks,” the distributor said.

Claire Hack
Twitter: @clairehack_mb