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Molybdenum to move in up to USD 14 a pound range next year
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Wednesday, 15 Dec 2010
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BNamericas reported that molybdenum prices are forecast to hover at the lower end of the USD 11 to USD 14 per pound range during 2011.

Mr Pablo Bascur MD of Chile based consulting firm MolyExp told BNamericas that "Current excesses in inventories, mostly in China and controlled by Asian companies, are not expected to be depleted in the near future, even if some stockholders cash in to pursue other investments."

After bottoming out at USD 7.8 per pound in April 2009, heavy purchasing by Chinese companies boosted prices, which have been fluctuating from USD 14 to USD 17.5 per pound in 2010. Molybdenum demand has shown strong recovery in 2010 and will continue to rise next year based on the significant growth of its end uses.

Mr Bascur said that stainless steel production increased by 44% in the first half of this year compared to the same period of 2009, while apparent steel use has been forecast to grow 13.1% to 1.27 billion tonnes in 2010 compared to last year and exceed the pre-crisis peak of 1.22 billion tonnes registered in 2007.

He added that meanwhile, there are 3,160 oil and gas rigs in operation globally, approaching pre crisis levels. Another significant molybdenum user, the automotive industry, is expecting sales to increase 10% to 56 million units compared to 2009.

However, mine output is also expected to grow this year and the slight decrease in 2011 will not be enough to offset the anticipated surplus, according to the executive. Global molybdenum consumption will grow 13.4% this year to 455 million pounds and 7.8% to 491 million pounds in 2011, while output will see an increase of 11.3% to 498 million pounds in 2010 and a slight fall of 0.4% to 496 million pounds in 2011.

According to Mr Bascur's estimates, added to excess production of 53 million pounds from 2009, the molybdenum market will see a surplus of 100 million pounds in 2011. Molybdenum prices could only go higher than USD 14 per pound in 2011 if western economies show a much stronger pace of recovery, but peaks will not last more than a few weeks.

Mr Bascur said that if credit facilities in China tighten and stockpiling molybdenum is not defined as a priority by the Chinese government, prices could go below the USD 11 per pound mark.

(Sourced from www.bnamericas.com)

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