Mills to cut spot molybdenum purchases due to China export rule
Tokyo (Platts)--1Jun2007 Steel mills in South Korea and Japan plan to reduce their molybdenum oxide and ferromoly purchases due to China implementing export regulations on these products, sources said this week. The Chinese government on Friday released a list of 30 molybdenum producers and trading companies to be granted export licenses. Companies without licenses will not be allowed to export. The government is also expected to set the volume of molybdenum products allowed to be exported by each licensed company. An official in charge of procurement at South Korean steel producer Posco said he had been prepared for this move. "There had been rumors on the Chinese government actions. It was expected. But this means we need to find other sources outside China ... South America, Chile," the official said. Posco sources molybdenum products through monthly tenders as well as on contracts. Monthly tenders involve moly products of 100 mt or more. Sources at Japanese blast furnace mills said they had increased the ratio of contract supplies, sourcing more from Chile on annual contracts, and less from China on spot basis. For January-April 2007, roughly 50% of Japan's ferromoly imports were from China, mostly on a spot basis, and 30% from Chile, mostly on contracts. Due to mills' tendencies to rely more on contracts, market sources generally expect to see a decrease in imports from China, some even saying that Chile may overtake China as the top ferromoly exporter to Japan. Mill sources generally said they expected molybdenum prices to rise on the back of possible reduction of Chinese exports. One trader, however, gave a different opinion: "Mills reducing tender procurement would mean less spot demand. That may result in falling prices."
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