Thompson Creek Metals (Blue Pearl Mng)

Molybdenum market turns corner, price seen rising to $35/lb by 2014 - Roskill

By Martin Hayes - Chief Correspondent, martin@minormetals.com (+44 (0)20 7929 6339)  

London, 27 April 2010 - The molybdenum market has seen its worst with demand now recovering, and although there will be small supply surpluses over the next few years, prices are seen strengthening to around $35 per pound by 2014, Judith Chegwidden, managing director of Roskill Information Services said on Tuesday.

"[The market] will be in surplus over the next few years. Beyond 2011 it will become tight, and deficits could arise up to 2014 if planned new capacity does not come in on time," she said at the Minor Metals Trade Association (MMTA) conference, organised by Metal-Events.

Molybdenum oxide (MO3) supply, which ranged between 120,000 and 140,000 tonnes between the mid-1990s and 2003, spurted to peak at some 220,000 tonnes in 2008, only to fall back by some 12 percent last year due to the economic crisis. Global capacity is around 300,000 tonnes, of which China and the US account for 37 and 27 percent respectively.

In China capacity is fragmented, and in some regions such as Huladao, production costs around $11/12 per pound are relatively high, leaving mines vulnerable to closures on cost grounds. MO3 spot prices are currently around $17.50/18.00 per pound.

Meanwhile, some 120,000 tonnes of new capacity is pencilled to come onstream by 2014, although this may be delayed due to the current difficult financing regime, Chegwidden said.

"If prices were to go to $15, then some of this will not happen."