London, December 17th (Argus) - Due to production constraints and the steadily increasing demand, the high copper prices are currently supporting the molybdenum market by tightening the supply of raw materials.
Molybdenum is mainly produced as a by-product of copper mining, which means that fluctuations in copper production will also affect the supply of molybdenum. Therefore, the copper price trend directly influences the availability of molybdenum concentrate and the prices of downstream oxidized molybdenum and molybdenum iron.
Since the beginning of this year, the average price of oxidized molybdenum powder delivered from the warehouse in Busan, South Korea, has been $22.24 per pound, up 4.2% compared to the same period in 2024. Similarly, the average price of European oxidized molybdenum (unadulterated at Rotterdam) has been $22.19 per pound this year, up 5.9% compared to the same period in 2024. These increases point to the overall tightening of the molybdenum market driven by the shortage of molybdenum concentrate.
Looking further downstream, the average price of molybdenum iron in Europe during January to November was $52.39 per kilogram, up 5.4% compared to the same period in 2024. Due to the structural supply shortage of molybdenum concentrate caused by the inability of global mines to meet demand, this price level reached the second-highest level since 2008.
Copper production disruptions have tightened the supply of molybdenum concentrate
Since the end of September breaking through $10,000 per ton, the three-month copper benchmark contract price on the London Metal Exchange (LME) has continued to rise.
This round of increase was driven by the plans of Chinese smelters to cut production, a significant drop in exchange inventory, and market expectations of US interest rate cuts. After the LME warehouse delivery volume soared by 50,725 tons in early December, the three-month copper price reached a historical high of $11,800 per ton on December 12th.
This year, under the dual support of supply constraints and continuous demand, the copper price has risen by more than 30%. However, some factors that tighten copper supply have also squeezed the supply of molybdenum concentrate and raised the prices of the entire molybdenum product series.
The mine accidents that occurred at the main copper-by-product molybdenum operation sites this year, such as the Inner Mongolia factory of China Jinmao Gold or the El Teniente factory of Codelco, not only limited copper concentrate production but also restricted molybdenum concentrate output.
Due to market expectations of tight molybdenum concentrate supply next year, the benchmark processing fee and refining fee (TC/RCs) for copper concentrate have dropped to multi-year lows, with the current spot TC being approximately -$40 per ton, which essentially forces smelters to transfer profits back to mining companies to ensure raw material supply.
The electrification of transportation, energy transition, AI-driven digitization, and the continuous demand for metals in the US market are jointly driving copper consumption. This sustained demand encourages copper miners to prioritize maximizing copper production rather than operational flexibility, limiting their ability to increase molybdenum recovery rates and alleviate the current tight supply of molybdenum through adjusting mining plans.
Several banks have commented on the outlook for the copper market in 2026, further supporting the expectation that the molybdenum price will remain firm in the new year. The US Goldman Sachs Group predicts that the strong copper price will continue, as the physical market in regions outside the US tightens and China's growth expectations improve. It has raised its copper price forecast for 2026 from the previous $10,000 per ton to $10,500. The US Citibank predicts that, given the easing fiscal and monetary environment and continued investment in energy infrastructure, the copper price may test $12,000 per ton in the second quarter of 2026.
The Chilean Copper Commission (Cochilco) predicts a global refining copper shortfall of 165,000 tons in 2026, while the Russian multi-metal producer Norilsk Nickel predicts a shortfall of approximately 100,000 tons. The deficit may further exacerbate the tight supply of upstream molybdenum, as copper production is likely to be prioritized over molybdenum.
