European molybdenum prices dip amid May public holidays

European spot prices for molybdic oxide and ferro-molybdenum dropped this week while May public holidays took place across much of the continent but trading activity is likely to pick back up in the near term, sources said.

Consumers in the steel sector are due to issue tenders for prompt delivery, which should provide near-term direction for spot prices, they said.

Prices have been generally drifting downward since a firm and steady increase in the first two months of the year.

Oxide supplies in the spot market are tight due to a reduction in offers from producers such as Climax and Molymet so far this year although rival producers Codelco and Kennecott have occasionally made some offer prices at the top end of price ranges.

Molymet last month signaled that it was withdrawing from the spot market for a period of unspecified duration.

This week, however, offer prices have dipped amid a virtual lack of reported trades. There were no trades reported in oxide business and only one truckload of ferro-molybdenum was reported as being sold.

Metal Bulletin assessed European molybdic oxide prices at $12.30-12.45 per lb in-warehouse Rotterdam on Wednesday, down from $12.30-12.55 per lb on Friday.

Ferro-molybdenum prices in Europe dipped at the high end to $29.70-30.00 per kg in-warehouse Rotterdam on Wednesday from $29.70-30.20 per kg on Friday.

Around the start of March, ferro-molybdenum and oxide prices hit annual peaks of $30.80-31.80 per kg and $13.00-13.20 per lb, both on an in-warehouse basis, respectively. The oxide market was as low as $9.80-9.90-per-lb range at the end of last year, while ferro-molybdenum was $24.50-25.10 per kg.

Briquette sales were reportedly around $12.80-12.90 per lb last week. The premium for briquettes over oxide had been dropping steadily since March, reaching only 10-15 cents in April. The differential was almost $1 in mid-February when oxide prices were around $12 per lb.

"Many dealers have been on vacation this week around the May Day holiday on Tuesday," one trader said. "However, there are steelmaker tenders later this week and next week, which should give a clearer trend in spot prices in the near term".

European steelmakers such as Germany's Lech-Stahlwerke and Georgsmarienhuette (GMH) are each looking for a truckload of ferro-molybdenum for delivery in tenders due next week, while a Turkish steel mill is looking for 70 tonnes of the alloy in a tender late this week.

Still, consumers seem to have been content with their current stockpiles since early in March and there is a deal of uncertainty about their demand for feed outside of their contracted longer-term supplies.

While underlying consumption is strong in the steel sector where operating rates are running close to or at capacity, there is downward pressure on steel prices. A current wide price gap between European domestic stainless steel and imported material from Asia has been weighing on European domestic base prices.

Market sentiment was bullish at the recent Metal Bulletin ferro-alloys conference in Hong Kong, with an outlook for oxide prices to hit as high as $15 per lb in coming weeks.

The initial rally in European molybdenum markets that started in November propelled oxide prices to a three-and-a-half-year high, as was also the case with ferro-molybdenum prices.

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