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Two Major Markets Of China And LME Are Supposed To Strengthen Influence On Moly Price (1)
= Consumers Will Actually Utilize From 2011 Molybdenum Oxide Price To Be Quoted At LME
While the steel industry has shared nearly 60% of the whole demand for molybdenum, the purchases of molybdenum by steel companies had grasped an important key to influence on molybdenum prices in the past years. Apart from part of molybdenum consumption shared by the chemical industry, steel mills had exhibited a substantial power for purchases of molybdenum products.

However, the factors to compose of molybdenum market are anticipated to change over largely starting from 2010. Molybdenum oxide is scheduled to be listed at London Metal Exchange (LME) from the 22nd February of 2010 as one of commodities for dealing in futures. Namely, a monetary commodity, without relation to the demand from steel companies, comes into an existence to be dealt at LME. At the same time, China has transformed from 2009 to the net country to import molybdenum and, accordingly, is forecasted to strengthen year by year their power to influence on molybdenum prices. Therefore, these two factors of China and LME are thought to more deepen their extents to relate with the molybdenum market.

The LME factor is pointed out by a possibility, which price of molybdenum oxide to be quoted at LME will put a certain influence on physical trading in January - February of 2010 and afterwards. In this meaning, the current price of molybdenum oxide has no doubt to have touched the bottom and it is marked an issue of this bottom price in the near future. Some of the existing major mines in the world have sporadically inclined to reduce their molybdenum production and, in view of an absence of the projects to develop newly molybdenum mines by 2011, the supply situation of molybdenum is becoming the constitution to be easily affected.

Nevertheless, it seems to be too early to permeate in 2010 the price of molybdenum oxide quoted at LME into that to be purchased by consumers, and the application of LME molybdenum price is still on the way to utilize. A substantial permeation of LME molybdenum price is anticipated to be materialize from 2011. At all events, molybdenum prices have held an anxiety for its transparency but the open dealing of molybdenum at LME will cause to eliminate gradually its improperness and is expected to result in deepening an existence of LME molybdenum price. The quantity of molybdenum produced at copper mines as by-product has shared 55 - 60% of the total output, having distributed in the market, and these copper mining companies have grown up LME for the last nearly 100 years to utilize. Therefore, LME is thought to cope with molybdenum to be listed without any sense of incompatibility.

However, in order to qualify molybdenum oxide as a monetary commodity at LME, the contents of such impurities as lead and copper as stipulated by LME are severe, apart from molybdenum content. Namely, the maximum contents have to be 0.05% for lead and 0.3% for copper. Also, in order to register the qualification of molybdenum oxide as LME brand, the plants to roast molybdenum ore are required to be approved and registered by LME. Therefore, it is questioned whether molybdenum oxide simply roasted molybdenum sulfide produced at copper mines as by-product is able to become the product qualified by LME or not. It will be necessary to carry out a fairly careful process for roasting. The plants to produce molybdenum as by-product will be requested to learn the process for roasting, which well-known processors have experienced for many years. It is not known yet whether even molybdenum oxide produced at the companies, having possessed roasters, is registered on LME or not.

When molybdenum oxide becomes a monetary commodity through LME, new molybdenum projects are expected to be promoted. Molybdenum is so far the commodity to buy and sell only in physical form but, when molybdenum becomes a monetary commodity through LME, financial organizations to concern in new projects by means of investing and financing will be easy to decentralize risks and will be able to comply with new molybdenum projects by a positive attitude.

At present, remarkable new projects to develop molybdenum mines are (1) Moly Mines in Western Australia = to develop Spinfex Ridge Mine (located in Pilbara district and to produce 25 million lbs. / year), (2) General Moly in USA = to develop Mount Hope Mine (located in Eureka district of Nevada State and to produce 40 million lbs. / year) and (3) Freeport-McMoRan in USA = to develop Climax Mine by open-pit mining (located in Climax district of Colorado State and to produce 20 million lbs. / year). These new project have targeted to commence its operations from 2011 - 2012 and afterwards. Owing to the Lehman shock emerged in autumn of last year, new molybdenum projects have been obliged to defer times to start these developments by 1 - 2 years but are still expected to be materialized. Among these new molybdenum projects, the Climax Mine has taken the most advantageous position, because Freeport-McMoRan is the existing molybdenum producer, which has kept the stable market for molybdenum and has been already well equipped with two plants to roast molybdenum sulfide (one is located in Fort Madison / USA and another one in Rotterdam / Netherlands).

(To be continued)
last modified : Tue 08 Dec, 2009 [10:40]
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