The price of molybdenum on the LME is down to its lowest level since July of 2010. Weak demand for stainless steel and the summer slowdown in the production of steel are factors. This could represent a bottom for the price as supporting factors come into play in the coming months.
Ken MacDonald Vice President of Business Strategy and CFO Erdene Resource Development discussed the factors controlling the current molybdenum market.
Molybdenum is increasingly being favored by scientists looking to create cheap and efficient hydrogen power.
The latest five year plan from China limits the production of many base metals in including molybdenum. China the world’s largest steel producer may find itself importing more molybdenum as a result.
Japan will need massive amounts of steel to rebuild what the tsunami washed away. Infrastructure and new automobiles will pave the way for steel demand in the country. While the events in Japan are horrific and depressing, and may affect global markets for quite some time, the need for steel will likely use up a large portion of the surplus that is currently holding down the price of moly.
The Continental Divide region is arguably the world’s most important moly producing deposits. At full production, these deposits could have a serious impact on world molybdenum supply.
The use of molybdenum in energy projects from nuclear energy to renewable will add new demand pressures on moly over the course of the year. Prices on the LME have been steadily gaining already this year, increased demand will only add to these dynamics.
Scientists have been playing around with moly’s unique attributes to make a whole host of new products that in the future may add a new dimension to demand.
After low prices enticed China to become a net importer of molybdenum, surpluses built up may cause price stagnation in 2011. Steel demand is slated to grow in 2011, just at a slower rate than seen in the past few years.
Growth for steel demand in China is expected to dip below 10 percent for the first time in recent years. Growth in the steel market, and consequently growth for moly is expected to improve, however, at a slower pace than in recent years. These factors may influence moly price in 2011.
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