A drop in molybdenum production from South Africa and Latin America, respectively, has boosted metal and alloy prices in tungsten alloy bar Europe, but any sustained prices gains are likely to depend on the revival of consumer demand and the rate at which it recovers.

A similar trend played out in the molybdenum market after the introduction of lockdown measures in a number of Latin American countries. Molybdenum and copper mines in Peru, Mexico and Chile slashed production as government's restricted activity to only essential services.

Price fluctuations in the molybdenum market were further exacerbated by the drop-in concentrates production at China's Yichun Luming facility, which was closed after a tailings dam leak at the end of March. The incident tightened availability of concentrates in China at a time when its steel industry began to ramp up production after coronavirus lockdown measures were eased, which then triggered buying interest Cemented Carbide Inserts in Europe from Asia-Pacific consumers.

Prices for 57pc grade molybdenum oxide powder rose to $8.20-8.50/lb on 31 March, following the news of the leak. They were last assessed at $8.15-8.35/lb on 16 April.

Ferro-molybdenum prices followed a similar pattern but posted strong gains over the past three consecutive sessions to reach $20.10-20.70/kg on 16 April, as higher tender prices from Chinese steelmakers shored up confidence, market participants said.

As markets digest the impact of production cuts, attention is turning toward the eventual demand recovery — in particular, the pace and the timing of it. This will be critical for any price gains in the short term, market participants said.

Although demand uncertainty is prevalent, European sellers this week have noted the return of some steel mills and foundries to production, thereby increasing the need for certain materials. But consumers are purchasing material only for immediate requirements.

Producers and alloy converters note that consumers — which have delayed taking material booked under their long-term contracts — would need to consume material from those existing commitments first before re-entering the spot market in Europe.

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