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Two Major Markets Of China And LME Are Supposed To Strengthen Influence On Moly Price (2)
Molybdenum oxide is listed on LME but belongs to one of small markets in parallel with cobalt to be listed on LME at the same time. The world output of molybdenum in 2008 was 218,000 tons and this scale of molybdenum production is not so small as 55,000 tons per annum in cobalt production but still the confined one compared with 1,350,000 tons / year of nickel production and 18,400,000 tons / year of refined copper production. In case of the confined market, it is an anxious matter that a speculative money to be invested by organized investors, having held a huge amount of funds, has a possibility to toss this small market. From this point of view, the final consumers concerned have still been a worry of this matter and have felt a strong objection to the listing of molybdenum oxide on LME. However, steel companies have been purchasing zinc and nickel as sub-raw materials on the basis of LME quotations for a long period and, therefore, this problem has a strong possibility to be resolved in the course of time.

In comparison with a huge scale of the copper cathode market, the nickel market is thought to have a high probability to be influenced and manipulated by a speculative money. LME nickel price recorded US$23.67 per lb. in May of 2007 but, in that time, the world situation of nickel had already turned to an oversupply on monthly base. In case of small market, the difficulties to compose market price by reflecting exactly the realities have been pointed out. In view of the fact that a scale of molybdenum market is estimated to be 1/6 of nickel market, there is an anxiety that price of molybdenum oxide to be quoted at LME is anticipated to be inevitable to have a volatility. A considerable fluctuation of price for molybdenum oxide will trouble steel mills as its consumers. Special steel products, containing molybdenum, are delivered to end-users under long-term contracts in many cases and, accordingly, steel mills are enforced to be charged by more risks.

The highest price of molybdenum oxide so far recorded in the world was US$33 per lb. of Mo as seen in 1979 and, in consequence of that the consumers concerned were promoted to retreat from molybdenum consumption, market price of molybdenum oxide had been depressed in the range of US$3 - 4 per lb. of Mo during approximately 20 years until 2001, excluding the 3 years of 1993 to 1995, because about 30% of the world demand for molybdenum was replaced by such substitutive metals as niobium, vanadium and titanium. The matter to list molybdenum oxide on LME is now questioned to have a possibility to recall the tragedy of price for molybdenum oxide as arisen in 1979 to 2001. Many of the parties concerned have held an anxiety for a decline of the world demand for molybdenum to be caused by a volatility of molybdenum prices. On the other hand, an optimistic forecast is that an appearance of substitutive metals has already exhausted and a possibility to replace molybdenum with substitutive materials will be thin hereafter.

China was the country, having exported molybdenum for a long period, but has turned from 2009 to the country to import molybdenum on net quantity base. A balance on trade of molybdenum by China during January - September of 2009 had resulted in <> imports = 62.98 million lbs. on Mo content base (51,806 tons on material base), <> exports = 9.22 million lbs. on Mo content base (7,291 tons on material base) and <> difference = an excess of 53.76 million lbs. on Mo content base in imports.

Owing to the excessive imports of molybdenum by China in the first half (January - June) of 2009, the stocks of molybdenum in China have increased and, in addition, stainless steel mills in China have been reducing their production, resulting in a decrease of molybdenum consumption. Therefore, the imports of molybdenum by China in October - December quarter of 2009 have decreased to a large extent. However, it is still anticipated that China will continue to import molybdenum on a stable pace from overseas sources, mainly from Chile, in 2010. Japan is one of the main markets for exports of molybdenum but the demand for molybdenum in Japan is unable to recover yet and the weight to be shared by China on exports of molybdenum is supposed to be bigger even in 2010. A major producer of molybdenum in Chile intends to conclude the contract on yearly base to export molybdenum for China in the calendar year of 2010, including the formula to fix molybdenum price, and is now moving to enter into the negotiations with steel companies in China on this business. The demand for molybdenum in China is estimated to have been shared by more than 20% of the world consumption and, together with a power of molybdenum to be listed on LME as a monetary commodity, and is no doubt to become a factor to raise a disturbance on the market of molybdenum in 2010 and afterwards.

For a reference, Chile exported 27,097 tons in material of roasted molybdenum in the first half of 2009, which included 10,837 tons for China, compared to that (50 tons) in the same period of 2008, and exceeded largely that (4,930 tons) exported for Japan in the same period. Japan was so far the largest country for Chile to export molybdenum.

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last modified : Thu 10 Dec, 2009 [10:22]
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