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By Tom Stundza -- Purchasing, 3/5/2008 9:47:00 AM
World demand for steel-strengthening alloy molybdenum is expected to grow 5.8% this year, forecasts Catherine Virga of the CPM Group in New York. And with supply lagging demand, “present molybdenum prices (above $30/lb for the past 10 months) are sustainable,” she tells the annual meeting in Toronto of the Prospectors and Developers Association of Canada.

Moly demand is growing for the alloying metal because it enhances steel’s anti-corrosive properties and allows that metal to withstand higher temperatures. She points out that in pipeline-grade steel, “increasing molybdenum content to 0.5% (from 0.2%) can reduce the total tonnage of steel used in construction of the pipeline, allowing producers to cut costs, reduce the amount of welding and lower weight and transportation costs.”

So, Virga says the most recent climb in molybdenum prices can be attributed to increasing demand from the energy sector, which accounts for 78% of demand for the metal due to expanded sales of oil country tubular goods. Today, less molybdenum is being produced as a byproduct of copper mining in the U.S., Canada, Peru and Chile and more is coming from primary alloy producers in China, the U.S., and Canada.

Yet assured supply of the needed 400-450 million lb/year is being tightened by tough new government regulations on exports from key producers in China. And this will continue to be a supply base issue, she says, because the expected growth in demand will force world production to the 550-million-lb level by 2011.