Moly production, prices will continue new trend in ‘08
The rapid growth of global steel consumption is partly responsible for today’s strong molybdenum demand. However, the current moly rally is different from the long moly rally three decades ago. Author: Dorothy Kosich Posted: Monday , 04 Feb 2008
RENO, NV -
CPM Group Senior Analyst, Base Metals, Catherine Virga advocated that molybdenum production and prices will set a new trend this year and beyond.
In a presentation to the Association for Mineral Exploration British Columbia's Mineral Roundup, Virga suggested that the present rally in molybdenum prices differs from the 1970s moly price recovery because of shifting organizations of molybdenum supplies; the widening scope of molybdenum end-uses; and diminishing inventories.
"Conflicting long-term goals of by-product and primary producers had historically resulted in large swings in mine production," she explained. However, Virga believes that this year moly will be setting a new trend due to:
* Molybdenum market is expected to become less dependent on by-product producers
* Regional diversification of molybdenum mine production
* Declining market share of dominant players
* Reduced supplies from China.
The changing role of by-product producers, combined with tighter regulation on Chinese producers is expected to continue the present rally in molybdenum prices, according to CPM's analysis. The situation is compounded by a declining number of secondary moly materials-such as recycled stainless steel and catalysts--and a rising cost structure.
Meanwhile, CPM also noted that the scope of molybdenum end-users is expanding as the world's demand for cleaner energy grows.
Virga forecast that the overall contributions traditional moly-producing miners and nations to global molybdenum mines supplies will decline. While China's domestic molybdenum mine production is projected to be less than 120 million pounds annually through 2009, the country's exports of molybdenum oxide and ferromolybdenum are anticipated to dip as low as to 30 million pounds this year due to export quotas.
In the meantime, Virga anticipates that world moly demand will grow 5.8% this year, due in part to the increasing demand for cleaner fuels. She advised that airspace superalloy consumption will increase moly demand as the global airline passenger rate is forecast to grow at an average rate of 5.6% in 2009.
Molybdenum cash operating cost may undergo a three-fold increase to $11.00 per pound by 2011, Virga asserted.
Despite rising costs and decreased production, Virga advised that substitution for the metal is not currently a viable option because "molybdenum's robust properties limit consumers' ability to substitute for other metals in its numerous applications." She also noted that "substitute markets cannot support a large transition from the molybdenum market give their relative size."
Commodities research consultants, CPM Group,is based in New York City.
THR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
