While steel production has remained strong in China and North America, the price of molybdenum has remained weak. China became a net importer of molybdenum in 2010, however, on the year the country is a net exporter of the metal. This trend however may be reversing.
Keeping track of the steel market is key for investors with an eye on molybdenum.
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.
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.
Many molybdenum firms benefited from higher prices for moly in 2010 as well as massive investments from moly hungry China. Backed by growing steel demand from the urbanization of China, moly prices rose from the abysmal $8 lows in 2008 up to $18 per pound in April 2010, prices have since settled to around $16 per pound.
A report stating that China may control molybdenum production by classifying the material as a ‘national mining resource’ has been raising eyebrows. How will this affect the molybdenum market? Will the moly market react as the rare earth market reacted to reduction in export quotas? Or will the fundamental differences between the two markets stop a feeding frenzy?
Analysts are bullish for the future of the molybdenum market stemming from growth projection in China. Steel demand, and consequently, demand for moly is expected to grow by 9 percent through 2012.
The Mining industry is complex and dangerous. Not only because of geological hazards, but also from the pitfalls associated with running a multi-national business. Like any economic sector, it has its up and downs.
Romios Gold Resources Inc. (TSX VENTURE:RG)(OTCBB:RMIOF)(FRANKFURT:D4R) announced that it will make application to extend the exercise date of 4,514,267 warrants issued to private placees pursuant to a financing which closed on July 15, 2009.
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