Moly oxide plants in China's Liaoning suspend operations on government checks

Around four molybdenum oxide production plants, or roasters, in China's Liaoning province have suspended production this week ahead of government environmental inspections, market sources said Friday. 

     The roasters, mostly clustered in the Huludao area, each have capacities of 1,000-2,000 mt/month, which is small. 
One trader said 150 mt/day of output was estimated to have been lost due to the closures. 

     "Not all plants were operating at full capacity," another trader noted. 

      The suspensions are expected to last about a week, the time it typically takes to complete inspections, the sources said. S&P Global Platts has not been able to confirm the outages directly with the plants. 

      Larger roasting plants have also reduced output to prepare for inspections, a Chinese producer source said. 

      The inspectors are expected to arrive in the Jinzhou City late next week, another plant source said. The inspectors usually visit plants without notice and in the molybdenum industry focus on sulfur emissions and air quality, along with water and other standards, several sources said. 

    "If they are caught not meeting the standards, they have to close. This, however, has not happened yet," the producer source said. 

    Chinese steelmakers have already begun to run short of ferromolybdenum stocks and the possibility of reduced ferromoly supply due to non-compliant plants closing may cause shortages, sources said. Ferromoly is made of moly oxide. 
 
   The producer source said Chinese steelmakers, which buy via monthly tenders, have been asking for delivery in one-two weeks rather than a month, indicating they have low stocks. 

   Some companies were reportedly considering the possibility of importing moly oxide feedstock. "Maybe it is serious this time," one source said. However, another source said some market participants were exaggerating. 

    The producer said China could import moly oxide at $12.10/lb CIF China/ex-warehouse Busan, while a trader said imports would need to be priced lower at $11.80/lb CIF China/ex-warehouse Busan. 

    Platts daily moly oxide benchmark stood at $12.05-$12.20/lb Thursday. 

    On Friday, one mill in Zhejiang province was heard seeking 500 mt and another headquartered in Shanghai was heard continuing to negotiate for 700 mt or more. 

    So far this week, tenders have been awarded at around Yuan 138,000-139,000/mt ($33.20/kg) ex-plant including 16% value added tax, tender participants said. 

    The biggest ferromoly consumer, a mill in the Shanxi province, has not yet issued a public buy tender this month, sources said. It typically buys 1,000-1,500 mt/month. 

    Separately, the price of moly concentrate, used for moly oxide production, were heard Friday at Yuan 2,000-2,020/metric ton unit for local supplies and Yuan 2,100/mtu for imports from North America.