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Date : 08/02/2024

ASX Molybdenum Stocks: Moly’s Demand Grows but Price Declined. Here is What You Need to Know.

Molybdenum is a metal with an atomic number of 42, which is very hard, and its melting point is 2,623°C (4,753°F). This silvery-white metal is extremely resistant to corrosion and abrasion and is thus essential in several industrial processes. One of its most important properties is the ability to retain strength even under highly elevated temperature levels; as such, it is commonly used as an additive in steel construction. Molybdenum increases steel’s hardness, ductility, and thermal and corrosion resistance, which is necessary for producing high-strength steel alloys widely used in construction, automotive, aerospace, and military fields.

Outside the scope of use in the production of steel and alloys, molybdenum is useful in the chemical manufacturing process, in the field of electronics, and agricultural activities. With its catalytic capability, it is used in refining petroleum into cleaner fuels, and it is also an excellent electrical conductor perfect for electronic devices and semiconductor manufacturing. As phosphorus is too extreme for traditional lubricants, molybdenum disulphide, a synthesis of molybdenum, is used as a high-performance lubricant in such conditions. Also, molybdenum is an essential trace element in plants that helps them fix nitrogen. It has a wide range of applications, showing its wide usage from the industrial aspect to technology and environmental control.

Price Trends

Molybdenum, often called Moly, hit a record price in February 2023, reaching $90 per kilogram ($90,000 per ton), which is expected to significantly affect stainless steel prices and manufacturing across various industries this year.

In the first quarter of 2021, Molybdenum prices were influenced by new COVID-19 restrictions in China, the leading producer and consumer of the metal. The slowdown in Chinese steel production, aimed at reducing pollution, also played a role in stagnating Moly prices. The year 2022 began with Moly priced at $44.90 per kilogram, but by August, it had dipped to $35.50 per kilogram.

Prices rebounded to $73.50 per kilogram in January 2023 and soared to $90 per kilogram in February. US BMO Capital Markets states that Moly has recently been among the top-performing base metals.

Despite some stockpiles of Molybdenum oxide and Ferro-molybdenum in Europe, inventory levels in European warehouses have been critically low. A supply shortage became apparent in 2022, with reports of decreased availability from China.

By February 2024, Moly’s price had fallen to $47 per kilogram, stabilizing in the $40s per kilogram range over the past month—a significant decrease but still higher than in previous years. This price fluctuation is intriguing, considering the sustained demand for Moly due to its application in various high-growth industries. It’s used in several types of stainless steel and specialized nickel alloys, with demand driven by sectors like defence, aviation, green technologies, electronics, and medical equipment. The Moly market is projected to reach $500 billion by 2033.

So, why has the price dropped by $48 per kilogram since February 2023 despite growing demand?

The early part of 2023 witnessed a supply squeeze in China and constraints from other major Moly producers like Chile, significantly reducing global supply. However, as stocks increased in the following months, prices eased from the February peak. Yet, year-over-year, Moly prices have continued to rise, showing a $30 per kilogram increase since May 2020. This suggests that Moly prices are influenced by two main factors: long-term demand and short-term supply challenges.

ASX Molybdenum Stocks

Culpeo Minerals (ASX: CPO)

Culpeo Minerals (ASX: CPO), a company exploring in Chile, has hit the jackpot with some significant finds of molybdenum at its Lana Corina project, hinting at a huge deposit. Their drilling work has shown there could be more spots with lots of copper and molybdenum. This is exciting news because it means there’s a ton of molybdenum there, and they’ve barely scratched the surface since the area is open for more exploration in every direction and deeper down. Culpeo is really focusing on this project, which could put them in a great spot in the molybdenum market, especially now when there’s insufficient supply and prices are increasing.

ASX CPO Shares

Caspin Resources (ASX: CPN)

Caspin Resources (ASX: CPN) has found some of the best spots for gold and molybdenum at their Duchess prospect in the Mt Squires project. They’ve come across a spot with molybdenum that shows there could be a big deposit there, and they think it could get even better further north and east, where they have yet to explore much. This find is a big deal because it suggests a lot of high-quality molybdenum there, similar to the big mines in the US. Caspin’s work in exploring could lead them to discover a significant new source of molybdenum, which would be great news for them and their investors.

ASX CPN Stocks

Hot Chili (ASX: HCH)

Hot Chili (ASX: HCH) has taken over the mining rights next to the Cortadera copper-gold deposit in their Costa Fuego project, and they’ve found a lot of copper, gold, and molybdenum there. They’ve got a big area with lots of minerals that look like the central Cortadera spot, which means there could be a lot of molybdenum to find. They’re drilling to see how big this copper area is and what it might mean for molybdenum production. The first results from this drilling give us a better idea of how much molybdenum they could get out of it.

ASX HCH Shares

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