The analysts' prediction suggests that the molybdenum market will experience an annual growth rate of 3% during the years 2017 to 2021. In 2017, the price of molybdenum experienced relative increases, and it is predicted that this upward trend will continue at a higher rate in 2018. At the end of 2016, the price of molybdenum oxide in the global market was $6.7 per pound (equivalent to approximately $14,770 per ton), which reached $8.65 per pound (equivalent to approximately $19,070 per ton) by mid-October 2017. However, this figure saw a decline again until mid-December, reaching $7.26 per pound (equivalent to approximately $16,000 per ton).
Chart 1 illustrates the changes in the cash price of molybdenum oxide on the London Metal Exchange from the beginning of January to December 22, 2017. As observed in this chart, the price of this product experienced significant growth in the market, particularly in early May, and then reached $16,000 per ton with some relative adjustments by mid-June, remaining at this price level since then. It should be noted that the price of this metallic oxide is primarily derived from the examination of all major world exchanges, and the value quoted on the London Metal Exchange is not the sole reference for trading this metal commodity worldwide.
Analyzing the supply and demand of molybdenum in the current calendar year will help better understand and analyze the market behavior of this commodity in the coming year. Based on these analyses, in the first quarter of 2017, some molybdenum-producing mines in China had production stoppages due to the commencement of the New Year and traditional Lantern Festival. On the other hand, the restart of certain mining units that had been shut down due to the decline in molybdenum prices and profit margins also faced delays. Finally, in the second quarter of 2017, these mines resumed their activities, leading to a decrease in the price of molybdenum oxide in the global market.
In July, environmental inspections of active mines and factory equipment led to production stoppages in some molybdenum-producing units in China. It is worth mentioning that this Asian country is the largest molybdenum producer globally, accounting for approximately 37% of the world's industrial metal production. It should be noted that about half of the extracted molybdenum in the world is a byproduct of the copper mining industry. Therefore, production interruptions in copper mines directly impact the molybdenum oxide market.
Regarding the direct relationship between the suspension of copper mining production and the molybdenum market, one can refer to the strike by workers at the Cerro Verde mine operated by Freeport-McMoRan in Peru, which resulted in a decrease in molybdenum production. Additionally, due to widespread strikes in Peru resulting from changes in labor laws for miners by the Ministry of Labor, it was expected that the production of mining units of companies such as Antamina, Freeport-McMoRan, Southern Copper, and MMG would be affected during the third quarter of 2017.
Despite the national strike by workers in various sectors of the Peruvian economy, Southern Copper announced in November through a statement to Peru's Market Regulation