If one believes the forecasts recently made by Terry Adams of UK-based mostly Adams Metals and the Albemarle Company, then the escalating demand for molybdenum products may affect the stainless steel business of POSCO. The Korean-primarily based steelmaker, with about 6.5 percent of sales coming from stainless steel, is the world’s fourth or fifth largest, relying upon production or market capitalization.
According to the company’s 2006 annual report, POSCO exports more than 70 % of its steel products across Asia, mainly to China, Japan and southeastern Asia. In response to document excessive nickel costs, the steelmaker introduced it could start manufacturing nickel-free stainless steels. So did European steelmakers ThyssenKrupp and Outokumpu, which has heavily relied on its austenitic products.
Would a sustained rally within the moly value lead to the identical backlash nickel not too long ago suffered? Unfortunately for steelmakers, molybdenum has a broader vary of applications than nickel.
At a current business conference, Terry Adams shocked his viewers by warning of potential provide/demand imbalances commencing as early as 2011. He believes by 2015, the molybdenum worth could get ‘interesting.’
However, this wasn’t the first sign of brewing trouble for molybdenum consumers. In early Could, one trader told American Metallic Market magazine, “We simply have no supply accessible.” He lamented that major moly producers, also called swing producers, have ‘nothing to promote proper now.’
On June 18th, China is predicted to announce the export quotas for molybdenum merchandise it has assigned to a restricted variety of exporters. Potential labor disputes at copper mines in Mexico and Chile could additional scale back out there molybdenum supply later in June. A Chilean labor spokesman warned of a ‘exhausting and prolonged strike.’ Molybdenum mined as a byproduct of copper manufacturing accounts for about 60 percent of the global supply.
At this tempo, molybdenum pricing may very well be severely impacted as early as this summer time. By next 12 months, if primary molybdenum production doesn’t shortly rise to fulfill the demand, the pricing local weather may worsen for finish-customers. Some traders consider moly costs may soon creep above previous price peaks two years ago. “Issues are going to get so much firmer as a result of there’s a lack of fabric,” one trader reported earlier this week. “There’s not loads on the ground.”
In response to different down-the-highway forecasts, the magic demand quantity is 460 million pounds of molybdenum. Adams predicts that projected western world demand might reach this consumption by 2015. Others consider strong moly demand could bring this target consumption a few years earlier.
Another concern is one we highlighted in a earlier article.
stockinterview.com/Information/11082006/Roasting-molybdenum.html USGS molybdenum commodity specialist Michael Magyar warned of a bottleneck, “… we can’t roast rather more moly proper now. Nobody is actively allowing for more roasting capability in North America.
Extra roasting capacity is, nonetheless, coming online this 12 months or next, courtesy of Molymet. Adams points out, “With the expansion in demand a brand new roaster, the scale of the brand new Molymet roaster is required each two years.” Adams further defined, “Without additional funding a roaster bottleneck may happen in 2011. Molymet plans another roaster about this time, however this would solely allow another two years development.”
In his presentation, Adams glimpsed sooner or later. Whereas western world demand ought to continue to annually enhance by three p.c, demand in China and the C.I.S. might increase by more than 10 p.c yearly. “The combined international impact would be an annual development rate of about 4.5 p.c,” he predicted. “Western mines may have to extend manufacturing by at the very least 6 % per annum.”
As we and others have concluded, Adams forecast, “Elevated output at major (moly) mines will probably be wanted to fill the hole beyond 2009.”
We presume delegates from the junior molybdenum mining attendees mentally began popping champagne corks after Adams introduced this level. However it was his next two points which buyers should digest:
o New or shuttered major mines will have to open by 2011
o By 2013, current main mines and Climax might be at capacity
Excessive-Stage Development in the Molybdenum Chemical Market
Having researched molybdenum for multiple year, solely recently did a few technical specialists (http://stockinterview.com/Information/06042007/molybdenum-copper-nickel-condenser-crossover.html) assist us perceive how a lot molybdenum is utilized in the condenser tubes of nu and desalination plants. Due to the diversified applications for this metallic, there’s much less dependable information in regards to the molybdenum sector than in others we’ve explored, e.g. uranium.
We continue to gather data for our subsequent publication, “Investing in the good Molybdenum Bull Market,’ and will present our detailed analysis in late August.
We’ve got discovered two robust-progress areas for molybdenum purposes.
It isn’t simply the steel market which uses molybdenum. Although the stainless and low alloy markets represent about two-thirds of molybdenum utilization, the quickest growing market appears to be catalysts within the moly chemical market.
According to a spokesman for the Albemarle Corporation, moly consumption within the catalyst part may grow by more than 30 percent by 2011. The chemical sector might eat as much as 30 million more pounds in the 2006 to 2011 time interval.
The worldwide catalyst market is anticipated to succeed in US$thirteen billion in sales this 12 months. Of this the petroleum refining sector should eat about 35 million pounds of molybdenum. The moly is used as a hydroprocessing (HPC) catalyst.
Growing international demand for crude oil, changing gasoline specs and energy in demand for aviation and diesel gas should contribute to molybdenum demand.
Because the general high quality of crude oil has considerably deteriorated, over the past 25 years, extra molybdenum might be consumed as a catalyst through the refinery course of. Sulfur content in U.S.-imported oil has doubled over this identical time interval. Molybdenum-primarily based catalysts are utilized to remove sulfur from petroleum, petrochemicals and coal-derived liquids
Tighter specs over the previous 15 years have demanded a higher performing catalyst and extra contained molybdenum in those catalysts. Over this time-frame, catalyst demand per barrel of crude oil has doubled – a median growth rate of five % per 12 months.
One business expert expects international HPC catalyst growth to annually enhance by eight p.c between 2006 and 2010. Molybdenum consumption for this use could improve by 46 p.c via 2010. Annual consumption may rise to more than 60 million pounds of molybdenum.
Lack of recent Major Mining Provide
The typical molybdenum concentrates being bought by the copper producers, as byproduct mining, contain forty – forty five p.c Mo. Concentrates from primary producers often common 50 – 55 %.
Because of this, major molybdenum mining operations supply a extra desirable focus. Technical moly, additionally identified Mo03 (molybdenum trioxide) specifies 57 % Mo and incorporates less than zero.05 p.c copper and 0.1 % sulfur. Primary molybdenum producers provide concentrates with lesser amounts of deleterious parts.
As a result of the concentrate is ‘cleaner,’ much less roasting is required to upgrade the fabric to tech oxide spec. Less electricity is expended to power the multi-hearth furnaces in the course of the roasting process. The cleaner primary moly focus gives the roaster extra flexibility. The upper spec concentrates will be blended with lower spec concentrates to improve the overall product, or the roaster can refine the upper spec material separately if the end-consumer requires it.
The less roasting to deliver materials as much as spec might additionally help avoid the bottlenecks a number of years from now.
Though byproduct molybdenum producers are anticipated to bear the brunt of elevated demand, the copper producers aren’t cooperating. Codelco’s molybdenum manufacturing dropped by 25 % in 2006 to 60 million pounds this previous year. Moly manufacturing might drop another 15 percent or extra this 12 months.
Due to the current molybdenum price revival, dozens of exploration firms have ‘instantly’ turn out to be molybdenum companies. There are scarce few with a doubtlessly viable undertaking.
Those major molybdenum producers and future producers we’ve been monitoring appear to be moving their projects forward.
Thompson Creek is Thompson Creek. This has emerged as the ‘major’ primary participant in North America while the world waits for Climax to return on-line again. Some believe the corporate’s Davidson moly deposit in British Columbia may not arrive on the corporate’s timetable. If so, then this could additional stress the moly worth.
Roca Mines should turn out to be a producer throughout July. But, this firm additionally hopes to develop its operations deeper and also needs to start those exploration efforts this summer. Within the interim, the high-grade molybdenum found at the corporate’s MAX mine ought to become a money cow in the third and fourth quarters of this 12 months. And for a number of years forward. Although the company is just not but in manufacturing, there appears to be no scarcity of molybdenum traders clamoring for the company’s future production. One other indication of a tight market.
Final month, Adanac Molybdenum Corp ordered its long-lead time tools for the development of its mining and milling advanced at Ruby Creek. Expenditures totaled nearly C$forty million, for which the corporate has made its down funds. Additionally, some time this summer time, Adanac ought to finally obtain its permits and commence building. Whereas the corporate boasts of 220 million pounds of molybdenum, a recent chat with Adanac consultant Ken Reser suggests Ruby Creek have extra pounds than was previously thought. Ongoing drilling results may later verify this speculation.
We proceed to observe United Bolero as a promising development firm in Montana. We have been instructed drilling at Bald Butte started over the weekend to upgrade the useful resource category. Hopefully, the drilling program will even transfer to its close by Cannivan Gulch property. Historically, however not technically documented, main miners, who labored these properties in the earlier moly cycle, estimated the corporate’s properties may host greater than 400 million pounds of molybdenum.
Major producers, such as these and probably others, is what molybdenum end-users are relying upon to fulfill their needs as we strategy 2009, 2010 and past.
Over the course of this summer season, we’ll additional examine different potential close to-term producers, corresponding to Moly Mines and others.
Many in the industry have warned us concerning the potential enhance of ‘moly dumping’ by the Chinese language. Historically, China has helped chill out molybdenum costs prior to now. According to Adams, as noted earlier in this article, China may change into much less of an element.
Essentially, this should not be a concern. Sometimes, a country is indirectly targeted on the background of its main politician. In China’s case, the eight members of the Politburo Standing Committee – China’s most powerful politicians – are all engineers. All are graduates of engineering or technology schools.
China’s president was skilled as a hydraulics engineer. The premier is a geologist, who additionally has a level as a mining engineer. The previous vice-premier was trained as an electrical engineer, as was the ‘propaganda’ chief. The Secretary of Political and Legislative Affairs was skilled as a metallurgist. Others hold levels in thermal engineering, radio electronics or electronic motor design.
Engineers like to construct issues. China has embarked on the greatest industrialization interval in history, dwarfing the development of infrastructure of the late nineteenth century in Europe and North America. As a result of molybdenum’s applications embody architecture, power, petroleum refinement, coal conversion, chemicals and other industrial functions, we would not be stunned if China quickly publicizes the ‘strategic’ significance of molybdenum (because it has uranium) and stops all exports.
Molybdenum additionally plays a powerful role in quite a few and numerous army purposes. Globally, military spending reached $1.2 trillion last 12 months. In 2006, China surpassed Japan as the biggest military spender in Asia. The U.S. Pentagon estimates China could be spending up to US$125 billion this 12 months. At least ten styles of ballistic missiles are deployed or in development. Our preliminary analysis into this topic confirms the massive proportion amount of molybdenum utilized in missiles. In some functions, the moly content material is better than 20 %.
In summary, every time we delve into a brand new area to investigate demand for the molybdenum application, we find progress. Sturdy demand may shock many stock and trade analysts over the following decade. Within the in the meantime, extra main molybdenum producers want to return forward. Not like some, we do not imagine the molybdenum story has but been fully revealed. This summer time, we hope to make the molybdenum market more – each on the demand aspect and the supply aspect.com. All Rights Reserved.
