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Prior To Listing Moly Oxide Price At LME, Test March Is Being Taken Place
= To Inaugurate From 22nd February, Moly Oxide Price Has Risen To Level Of US$15 Per Lb. / Mo
Prior to the listing price of molybdenum oxide at LME (London Metal Exchange) to be inaugurated from the 22nd February of 2010, the speculations on price of molybdenum oxide from various sides are whirling in the market as anticipated, having caused to push up spot price of molybdenum oxide, and the oxide price actually transacted between traders on the end of last week has risen to a level of US$15 - 16 per lb. of Mo. After spot price of molybdenum oxide had once risen to a higher level of US$18.30 per lb. of Mo as recorded in the middle of August of 2009, the oxide price turned to fall but, by means of utilizing a speculative factor to list price of molybdenum oxide at LME, spot price of molybdenum oxide has at a stretch risen to a considerable extent.

Owing to the fact that major molybdenum producers have deepened from 10 years ago their direct contracts with such large consumers as steel companies on sales of molybdenum products, the position taken by traders on molybdenum business has retreated. The main activities engaged by traders in molybdenum business are to purchase molybdenum sulfide (molybdenum concentrate) from copper mining companies and to process this raw material on toll consignment to molybdenum oxide for their sales but have been largely restrained at present. Nevertheless, because of the listing price of molybdenum oxide at LME, these traders are thought to have a possibility to play the role of hedging on price of molybdenum oxide through the dealing at LME.

The reason is that, as far as traders have a capability to sell molybdenum oxide, it will become possible for them to buy the actual cargoes from LME and to sell the cargoes to their consumers. Namely, LME will become the source to purchase molybdenum oxide. Also, the actual cargoes of molybdenum oxide held by traders will be able to make a hedge sale to LME and, therefore, the activities on molybdenum business taken by traders are anticipated to enlarge to a substantial extent.

Under the circumstances, the parties concerned have an opinion that traders are expected to participate largely in the market of molybdenum. On the other hand, the listing price of molybdenum oxide at LME is forecasted to elevate a transparency of the price and, accordingly, it is also supposed that consumers should be able to purchase molybdenum oxide from LME at the price, reflecting the world situation on supply of molybdenum. However, when an extreme fluctuation of nickel price at LME as seen in the past years has been reviewed, an anxiety for price of molybdenum oxide at LME has been still left.

In 2007, when nickel price had a steep rise, the quantity of nickel metal dealt at LME was more than 10 times of the actual demand (1,350,000 - 1,400,000 tons / year), which was the money game having far differed from the reality. Therefore, in order to cope with this money game for nickel metal, LME has adopted the regulations for backwardation from the 7th June of 2007 and moved to control the radical dealings. Consequently, nickel price at LME in August of 2007 had fallen to half of the steeply risen one.

An anxiety for price of molybdenum oxide to be listed at LME will be possible to exist in the same case as that of nickel price and, therefore, the dealing of molybdenum oxide at LME is desirable to be supervised by LME. However, spot price of molybdenum oxide transacted between traders from the beginning of 2010 has moved to rise as anticipated and the oxide price as of the 15th of January had risen to a level of US$15 - 16 per lb. of Mo, which had a considerable rise of 30% for more than one month in comparison with that (US$11) at the beginning of December of 2009.

Prior to the listing price of molybdenum oxide at LME, traders have been purchasing substantial quantities of molybdenum on speculation from November - December of last year and molybdenum producers have taken a cautious attitude for their sales of molybdenum by means of watching carefully about the inauguration of the listing price of molybdenum oxide at LME from the 22nd February of 2010. Under this situation, Thompson Creek Metals of the USA is scheduled to implement maintenance at the Langeloth plant in Philadelphia of Pennsylvania State for 5 weeks to start from the middle of April of this year in order to reform the facilities for roasting and this work is thought to cause an influence on molybdenum prices.

The characteristics of dealing at LME are pointed out as (1) an effect to restrict fluctuation of price, (2) a possibility to fix price for sales in a long period, (3) a possibility to establish the plan for operation on a long run, (4) a financial merit to be able to make it to warrant (easy to raise funds), and so on.

For a reference, the companies concerned in molybdenum listed up by LME are <> molybdenum producers (mines and roasters) : 27 companies, <> traders : 49 companies and <> consumers : 88 companies. Also, according to LME, the specifications and conditions of molybdenum for forward deliveries scheduled to be inaugurated from the 22nd February of 2010 are as per the table shown the right ;
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last modified : Fri 22 Jan, 2010 [09:58]
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