By Leia Michele Toovey- Exclusive to Moly Investing News

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Molybdenum prices are currently hovering around the $9 per lb mark, a drastic decline from last August’s high of $34. Molybdenum managed to hold its price point longer than other metals; but in the fourth quarter of 2008 the steel industry’s defeat sent molybdenum on a free fall. Around 70 per cent of molybdenum demand comes from steel production, and with steel producers operating at 50 per cent capacity it is no surprise that the precious metal is trading at $9 per lb. 

US based CPM group, and the Chilean copper commission Cochilco, agree on moly’s near term outlook. Molybdenum prices will be around $11.00 per lb in 2009. CPM sees a revival in 2011 to above $20 per lb coinciding with increased demand. Global stimuli packages will help boost prices of molybdenum, to around $16 in 2010. “Our estimates indicate that over $700 billion will be poured into the market on the infrastructure side” said Douglas Horn, commodity analyst at CPM.

Cochilco anticipates that global molybdenum output will be down 1.6 per cent this year as demand falls 0.9 per cent, leading to a likely surplus of 284 metric tonnes. “This would mean molybdenum prices will fluctuate between $9- and $14 per pound, with an average of about $11 per pound for the year,” Cochilco added. The report said that in 2008 the molybdenum market ended with a surplus of 1,700 metric tonnes. “With respect to Chile, after a fall of 25 per cent in production in 2008 versus 2007, there will be a recovery, with output reaching 40,000 tonnes in 2009, or 19 per cent more than last year,” Cochilco said. The rise will come amid higher output at several divisions of Codelco, the world’s second-largest producer of the metal.

The soft launch of the London Metal Exchange’s contracts in molybdenum oxide will take place towards the end of this year, later than previously scheduled, according to the exchange’s new products manager, Chris Evans. The timetable for the contracts depends on clearing house LCH Clearnet launching its Synapse clearing system, he said. “It’s in the hands of LCH. They’ve still slated a completion date for Synapse in the second half, so we hope we can launch in the second half too,” Evans said, noting that trading is unlikely to begin before the fourth quarter. The London Metal Exchange recently held a conference pertaining to the upcoming contracts. The conference was entitled “The Cobalt and Molybdenum Pricing Risk Management Conference” and took place on March 3-4 in London.

Company News 

Mining junior Columbia Yukon Explorations (TSX.V: CYU) surged 28 per cent in trading after the company released an updated NI 43-101 compliant resource estimate for the Storie Property molybdenum deposit in British Columbia. The resource estimate, took into account an extensive drilling program completed by the company during the 2008 season. The total current estimated total of both the measured and indicated resource categories now stands at 139.82 million tonnes grading 0.064 per cent Molybdenum at a cutoff of 0.030 per cent. A further 58.39 million tonnes grading 0.059 per cent Molybdenum at a cutoff of 0.030 per cent sits in the inferred category. The deposit remains open in three directions, offering plenty of scope to add further tonnage to the project.

Quadra Mining (TSX:QUA) reported a quarterly loss on Friday, citing a write-down related to its molybdenum project in Greenland and a steep drop in copper prices. The net loss was $126 million, or $1.94 a share. That compares to a profit of $5.5 million, or $0.14 a share, in the year-before period. The Vancouver-based company suspended activities on its Greenland project due to the sharp drop in molybdenum prices, and the lack of equity stalling the credit markets.  The company’s cash flow was hindered due to the fall in copper prices. The company said it met its 2008 revised production guidance, producing 160 million pounds of copper and 138,000 ounces of gold. Quadra mines primarily from its Robinson mine in Nevada.

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