Molybdenum prices are set to increase on the back of healthy demand from the oil and gas industry and a decline in supply growth.

Prices for the metal are at nearly US$13 per pound, the highest since 2014 and more than double compared to levels seen in December 2015.

According to the International Molybdenum Association, 80 percent of the molybdenum that is mined each year is used to make stainless steel, cast iron and superalloys.

“Molybdenum is used in exploration, drilling, production and refining,” CRU Group’s George Heppel told Reuters, adding that high prices have encouraged primary production from top producer China.

“The trend over the next 5 years is one of very low supply growth from by-product sources. In the early-2020s, we will need to see primary mines reopened to keep the market balanced,” he noted.

According to CRU Group, molybdenum demand is forecast at 577 million pounds this year, of which 16 percent will come from oil and gas.

“We’re seeing a pick up in tubular goods used in the North American shale gas market,” said David Merriman, a senior analyst at metals consultancy Roskill. “There’s a strong correlation between moly demand and active drill counts.”

Additionally, demand from the aerospace and car industries is also picking up.

Looking over to supply, about half of molybdenum is extracted as a by-product of copper mining, and prices saw some support from copper mine disruptions in 2017. In fact, supply concerns are increasing as lower output from top mines could also hit the market this year.

Production at Chile’s Codelco declined from 30,000 tonnes of moly in 2016 to 28,700 tonnes in 2017, due to lower grades at its Chuquicamata mine.

Meanwhile, the Sierra Gorda mine in Chile, in which Polish copper miner KGHM (FWB:KGHA) has a 55-percent stake, produced nearly 36 million pounds in 2017. That said, the company expects output to decline 15 to 20 percent also due to lower ore grades.