The first week of 2009 was a sleepy one for molybdenum with thin trading volume as many customers remained on holidays. Activity in China was by far the slowest, with Chinese molybdenum oxide and ferromolybdenum producers halting spot molybdenum offers to overseas customers.
Slower Chinese buying impacted Ferro-molybdenum prices between last Wednesday and Friday; however, the US’s proposed $136 Billion infrastructure spending plan capped the downside. Western-grade Ferro-molybdenum fell to $24.50-26.50 per kg from $26-28 per kg previously, with the bulk of material sold towards the low end of the range.
The global economic slowdown is affecting both the demand, and price for molybdenum. To cope, companies are planning output cuts and plotting new investment strategies. For the few companies that have a very strong financial position, they are on the look out for acquisitions.
After holding its ground much longer than other base metals, molybdenum’s price point has given way to the global economic current. The metal was stable in the $32 to $35 a pound range for much of this year; holding its value compared to the price plummet of the other base metals.
Japan wants to test the moly market, and will do so by issuing a temporary cut in the November nickel stainless molybdenum (SUS316) steel output. Output will be cut approximately 10%, and for the time being, the curb in production will only last a month to see how the market reacts.
The market volatility over the past two weeks has finally it moly. The alloying metal has held its own for months, while most of the other metals declined rapidly as news about the downturn in the economy permeated the markets.
Molybdenum exploration has been on a fast track this year, as a shortage in supply and an increase in demand have pushed prices of the alloying metal up and up. Until recently, moly has held stable despite all the challenges on Wall Street.
The past week was arguably the most volatile in market history, however, molybdenum managed to continue its recent trend of holding steadfast despite the market’s hiccups. This was a week that saw stocks and commodities across the board plummet.
The future of Molybdenum demand gained some extra security with the likelihood of new applications in the short term. Even as other metal prices eased off in recent weeks and months, molybdenum has held its highs, in part because of its wide gamut of uses.
The London Metal Exchange will add molybdenum to its arsenal in the second half of 2009. The move was announced on Sept 4th, when the LME board voted in favour of adding both molybdenum and cobalt to its futures trading. The move was met with mixed reviews.
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