By Leia Michele Toovey- Exclusive to Moly Investing News

Share Moly prices have exhibited a gradual increase, recently surpassing $10.00 per lb.  Miners are hoping the metal continues the trend, claiming a price minimum of $10.00 per lb is essential in order to turn a profit. Moly was trading at $33.50 per lb before the financial crisis sent a shockwave through the global economy.

Moly is often mined as a byproduct of copper. Copper has been on a recovery since the start of 2009 on the back of Chinese stockpiling. China has also been importing molybdenum since the beginning of 2009, and these active imports have finally started to influence prices. Chinese purchases are influential; however, miners say that purchasers are reluctant to pay more than $9.00 for the strategic metal. According to the customs statistics released in China, the country imported 14,568 tonnes in material of molybdenum in January to March quarter of 2009, nine times more than the 2008 year-on-year period.

The recent trend has many claiming the metal has bottomed out. However, what price point moly will maintain going forward is up for debate.  Last week we reported on how analysts were cutting their forecast for the metal on the back of Platts metal’s weekly pricing report. Andrew Young at investment bank Dahlman Rose & Co. cut his forecast to $10 per lb this year from a previous prediction of $12, and lowered the estimate for next year to $12 from $15. Meanwhile, a less bullish Mike Gambardella at JP Morgan Chase sees molybdenum averaging around $8 per pound this year and $11.50 in 2010.  

Those who still dare to voice their opinion after the recent crisis shattered everyone’s expectations claim that the bottom has been hit, and the recent climb is a sign that consumers have used up their stockpiles and are now turning to new purchases. Molybdenum has no substitute; therefore if stockpiles are in fact depleted then a rebound in demand is imminent.  Although there are differing opinions, there is somewhat of a consensus that a revival in production of stainless steel and special steel can be expected in the second half of 2009 or in 2010.  

Company News

Grupo Mexico in Mexico released recently their settlement of accounts for the first quarter of 2009. According to this report, affiliated company Southern Peru Copper Corporation produced 4,056 tons of molybdenum in molybdenum concentrate in January-March quarter of 2009 as compared with 3,924 tons in the same quarter of 2008. Southern Peru Copper sold 4,022 tonnes of molybdenum in concentrate in the first quarter of 2009, compared to 4,029 tonnes in the first quarter of 2008.

Antofagasta reported a substantial drop in first quarter revenues due to lower copper and molybdenum prices, despite the fact that first quarter production was in-line with guidance. First quarter group turnover was $544.5 million.  Lower copper and molybdenum prices were partially offset by higher sales volumes. At the end of the first quarter, the weighted average forward copper price for unsettled sales was 182.4 cents per pound, which resulted in a realized copper price higher than the LME average for the three month period, at 207.3 cents per pound. The volume of copper sold was 106,900 tonnes; molybdenum sales and production volumes were 1,700 tonnes.

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