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General Review Of Molybdenum In 2009 And Its Outlook For New Year
= Key Points Are Listing Molybdenum On LME And Chinese Power To Import Molybdenum
On the occasion of 2010, the composition of molybdenum is anticipated to change largely. In the past years, the quantity of molybdenum consumed by steel companies had shared nearly 60% of the whole demand and was a main factor to influence on molybdenum prices. The demand for molybdenum from steel companies has still kept a large weight but, at the opportunity to list molybdenum on LME (London Metal Exchange) from February of 2010, new composition of molybdenum is expected to be built up. The molybdenum dealing for three-month futures at LME is scheduled to commence from the 22nd February of 2010 but its function will need a certain time to search. Therefore, it has been viewed that, when the parties concerned could have well known about the molybdenum dealing at LME, molybdenum price quoted on LME will exhibit a power to influence on the market from 2011.

The open pricing at LME should bring a transparency in molybdenum business and the consumers concerned are thought to have been convinced by this open pricing at LME. The dealings of such base metals as copper, zinc, and so on at LME have had a long history for more than 100 years. The copper mining companies, having played the main role of metals businesses, have also shared 50 - 60% of the world molybdenum production and, accordingly, have well known about LME. These copper mining companies have participated in the dealings at LME without any sense of incompatibility and the contracts on sales of molybdenum to be concluded with steel companies from 2011 will be most probably led by molybdenum price quoted on LME. At the same time when molybdenum price is quoted on LME, molybdenum will become the warrant as one of commodities for financing and is anticipated to be circulated in the world monetary market. From this point of view, organized investors will come up to the market as new buyers and sellers of molybdenum.

The demand for molybdenum in China is forecasted to put a substantial impact on molybdenum prices in 2010, following the same case in 2009. China has suddenly changed in 2009 from the country to export molybdenum as continued for more than 10 years to that to import molybdenum. In line with the strengthened policy to preserve natural resources as adopted by the Central Government of China, molybdenum has been still maintained as the objective material to regulate its exports. The Government said to follow this policy in 2010 and to keep the measure to allocate quantities for specified exporters. In view of the actual quantity of molybdenum exported by China in 2009, the exports of Chinese molybdenum seem to put a slight impact on the world market of molybdenum.

When the quantity of molybdenum imported by China in 2009 was compared with that exported by China in the same year, it is clear that the imports exceeded considerably the exports. The quantities (on material base) of molybdenum imported and exported by China in the calendar year of 2009 were (1) imports = <> roasted molybdenum ore : 48,800 tons, <> unroasted molybdenum ore : 14,200 tons, <> ferro-molybdenum : 500 tons and <> total : 63,500 tons on material base (corresponding to 77.0 million lbs. on Mo content base) and (2) exports = <> roasted molybdenum ore : 8,600 tons, <> unroasted molybdenum ore : 450 tons, <> ferro-molybdenum : 700 tons and <> total : 9,750 tons on material base (corresponding to 12.4 million lbs. on Mo content base). Namely, China imported 64.6 million lbs. on Mo content base in 2009 as the excessive quantity of molybdenum in comparison with that exported by China in 2009. The world consumption of molybdenum in 2009 is estimated at 4,100 - 4,200 million lbs. and, therefore, China shared 15.5% of the world demand for molybdenum.

It was informed that the Central Government of China purchased molybdenum as their stockpile in the first half of 2009. This quantity of molybdenum imported into China as the stockpile had shared a large weight and, even if this stockpiled quantity was excluded, China has a big possibility to maintain hereafter as the country to consume molybdenum on a large scale. The output of crude steel by China in 2009 is estimated at 570 million tons, having increased by 12% from that in 2008, and China is anticipated to produce crude steel on a scale of 600 million tons per annum in 2010. According to a forecast by analysts in the western countries, China is expected to produce 8.20 million tons per annum of crude stainless steel in 2010 (an official announcement from China is to produce 9.90 million tons in 2010) and even this output in 2010 will have an increase of more than 1.00 million tons from that in 2009. A further expansion in production of crude stainless steel in China is anticipated. The background surrounding molybdenum in China has become a large factor to move molybdenum prices.

Market price of molybdenum oxide fluctuated to a considerable extent in 2009. The movements of price for molybdenum oxide in 2009 were US$18.30 per lb. of Mo as a higher side (recorded in August) and US$7.70 as a lower side (recorded in April) and a differential of these two prices came to US$10.60 per lb. of Mo. This large fluctuation on price of molybdenum oxide was affected by the Lehman shock arisen in September of 2008. Unless China had an extraordinary import of molybdenum as done in the first half of 2009 (actually imported 40.5 million lbs. of molybdenum), the lowered price of US$7.70 per lb. of Mo as recorded in April of 2009 should have a further fall to break this lowest one.

Owing to the fact that major copper mining companies, which are also major producers of molybdenum, have given a priority to copper production, the operation to recover molybdenum as by-product has been restricted. Therefore, major copper mines in the western countries have been compelled to reduce their molybdenum production on a basic tone. Consequently, the world supply of molybdenum has continued on a shortage since 2007. Therefore, market price of molybdenum oxide could have maintained the level of US$30 - 35 per lb. of Mo during a long period of 2007 to September of 2008. Since a considerable amount of funds was invested in molybdenum, a crisis of the monetary market caused by the Lehman shock had sensitively reacted to the market of molybdenum and traders disposed of their stocks of molybdenum at discounted prices, having stimulated molybdenum producers to be in a hurry to sell molybdenum. The price of molybdenum oxide in September of 2008 was US$30 per lb. of Mo but that as of the end of 2008 fell to US$9.50 per lb. of Mo.

This destructive fall of price for molybdenum oxide has resulted in deferring most of new molybdenum projects by 1 - 2 years. Consequently, new molybdenum projects scheduled to operate in 2010 are nearly nothing. Only Thompson Creek Metals has aimed to resume in 2010 the project to increase molybdenum production at Thompson Creek Mine of the USA and at Endako Mine of Canada. General Moly of the USA and Moly Mines of Australia have resumed new molybdenum projects, which were once suspended to develop, but these molybdenum projects are scheduled to complete in 2011 or afterwards.

The output of molybdenum in 2010 at copper mining companies is supposed to continue on a restrictive scale. Codelco of Chile, as the largest producer of molybdenum in the world, already said that the Company will produce 45 million lbs. of Mo in molybdenum concentrate in 2010, remaining on a similar scale to that in 2008, and Kennecott of the USA, having planned to increase molybdenum production for the future, is still scheduled to produce molybdenum in 2010 on a low level. Freeport-McMoRan of the USA, as a leading producer of molybdenum, has still maintained a cautious attitude to increase their molybdenum production. It is a certain matter that, in 2010 when molybdenum producers in the western countries are not in a position to expand their molybdenum production, the supply situation of molybdenum will tighten further. The world output of crude steel in 2009 came to 1,200 million tons, having decreased by 11% compared to that in the preceding year of 2008, but there will be no doubt that, when that in 2010 is shifted to a basic tone to increase, molybdenum prices will surely ride on the orbit to rise. The price of molybdenum oxide on the beginning of 2010 has already recovered to a level of US$13 per lb. of Mo.
last modified : Tue 19 Jan, 2010 [10:10]
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