CMOC bullish despite export quota
China Molybdenum Co (CMOC), the mainland's second-biggest producer of the material used to toughen steel, expects the metal's price to remain strong in this half even with the government's policy to curb exports of the strategically important metal.
'We're optimistic on the price of molybdenum and believe it will stay at high levels in the second half of the year as domestic demand, mainly coming from the stainless steel sector, maintains double-digit growth,' chairman Duan Yuxian said yesterday after the company reported an 85.3 per cent increase in first-half profit to 1.1 billion yuan late on Wednesday.
The domestic average price of molybdenum concentrate, molybdenum oxide and ferromolybdenum had risen 16 per cent to 19 per cent from the beginning of the year to June on robust demand and tight supply.
The international average price rose even more sharply - 31-39 per cent - due to a 10-15 per cent tariff imposed by Beijing on the export of molybdenum oxide and molybdenum ore products.
The mainland, which has the world's biggest deposits of the ore, introduced an export quota system in June under which only licensed firms can export the metal over a certain amount.
Although Beijing's measures to curb molybdenum exports are expected to increase the supply in the domestic market, Mr Duan said the company did not expect major excess supply as demand is strong.
Wu Wenjun, general manager at the Luoyang, Henan-based metal producer, said the company's exports would remain stable and the proportion would not drop sharply under the export quota system as the company had an export licence and enough quota.
'The quota the government grants is based on the firm's export volume in the previous year, so we don't see any big impact,' Mr Wu said.
Export sales in this half are likely to account for 35 per cent of the total sale volume, as in the first half.