Core Views On The Molybdenum Metal Industry

Differences in Concept and Attributes between Molybdenum and Tungsten Substitution: This paper proposes a new concept that molybdenum is a substitute for tungsten. Initially, molybdenum was primarily used in ferroalloys. During World War I, tungsten was more expensive than gold, and gun barrels were often made of tungsten. In terms of performance attributes, molybdenum's melting point, strength, and high-temperature resistance are all weaker than those of tungsten. Therefore, its substitution feasibility is only feasible in low- to mid-range applications. The further away from high-end applications, the more direct the substitution effect.

Multi-domain Substitution Effect Analysis:In the military field, besides high-armour-piercing shells, molybdenum has a strong substitution effect on tungsten in low- to medium-power shells and low- to medium-temperature engine blades. In non-military fields such as cutting tools and high-speed steel, although the cost transmission of tungsten-based cemented carbide is relatively smooth, there is still room for substitution in low- to mid-range downstream applications: a. The molybdenum content in high-speed steel is higher than in general cemented carbide; b. In the cutting tool field, a "two-molybdenum-one-tungsten" substitution scheme, although with a slight performance reduction, can basically meet the needs of low- to mid-range applications. • Molybdenum Price Calculation from a Substitution Perspective: Based on the substitution ratio of "two molybdenum products plus one tungsten product," and considering current market prices, tungsten powder is priced at nearly 2 million yuan/ton, while molybdenum powder is priced at 500,000 yuan/ton. If the price of molybdenum powder rises to 1 million yuan/ton, its economic advantage over tungsten will weaken, implying that molybdenum powder prices have the potential to double. Corresponding to the current molybdenum concentrate price of 4,500 yuan/ton-degree, the potential price could rise to 9,000-10,000 yuan/ton-degree. From the perspective of substitution demand in the blade industry alone, molybdenum prices have significant marginal upward momentum.

Molybdenum Supply Structure Analysis: The market has significant expectations regarding molybdenum fundamentals, resulting in relatively low research intensity. From a supply structure perspective, molybdenum supply is structured with overseas sources accounting for over half and domestic sources accounting for over 40%, with overseas supply dominating global supply.

 Molybdenum Demand Structure Breakdown: 85%–90% of molybdenum demand is concentrated in the steel sector, but not in rebar. This is because molybdenum is primarily used to improve the high-temperature resistance, corrosion resistance, and abrasion resistance of steel, properties that rebar does not require. Molybdenum demand in the steel sector can be divided into two parts: half is concentrated in high-end stainless steel, and the other half in specialty steels and special steels. Global annual demand for molybdenum in high-end stainless steel is only about two to three million tons, far lower than the overall stainless steel production volume of tens of millions or even hundreds of millions of tons. Therefore, overall stainless steel production and inventory data have limited representativeness of molybdenum demand and require analysis based on specific scenarios.

Specific Scenarios for Each Demand Scenario: a. Downstream Scenarios for High-End Stainless Steel: Primarily used in the energy and chemical sector, covering pipelines, reaction vessels, evaporation pipes, etc., in thermal power, oil and gas, and chemical industries. Previously, weak oil prices led to insufficient capital expenditure in related sectors, resulting in generally weak demand. However, subsequent demand expectations are positive, with this demand projected to return to the boom levels of 2022-2023. This sector alone could drive a large single-digit increase (at least 5 percentage points) in total molybdenum demand.
b. Specialty steel and specialty steel: Benefiting from the upgrading of domestic manufacturing and the development of new and old energy industries, molybdenum is mainly used in medium and thick plates, covering wind power, shipbuilding, construction machinery, and steel structures. Although the amount of molybdenum added to medium plates is relatively low, the annual volume of medium plates reaches tens of millions or even hundreds of millions of tons, resulting in a great overall demand.
c. Military industry: In normal years, molybdenum demand in the military industry accounts for 5-10% of total demand, with an annual consumption of approximately 20,000 tons. If geopolitical tensions escalate or war breaks out, the demand for molybdenum in this sector is highly elastic, with a high probability of doubling or even tripling in the current year.

Core Drivers of Molybdenum Price Increase: During periods of increased overseas military spending, molybdenum prices experienced a strong upward trend, rising from 1500 yuan per ton-degree to 5500 yuan per ton-degree, a threefold increase. Currently, the price is approximately 4500 yuan per ton-degree, higher than the previous starting point, and the market's restocking momentum remains strong. Specific driving factors include: a. Molybdenum's inclusion in the export control list, under the backdrop of overseas strategic considerations, has created a strong logic for rushing to export; b. Driven by substitution demand, molybdenum demand growth is expected to return to over 10% in 2026, while global molybdenum supply growth has only averaged 3-4% annually in recent years, leading to a continued widening of the supply-demand gap; c. Low inventory levels, with current molybdenum inventory days at 22-23 days, only 4-5 days higher than in 2022. Low inventory further strengthens the support for molybdenum price increases, and the overall logic of the widening supply-demand gap remains sound.