Chinese Mo Export Quotas to Start on Mar. 1
finance.groups.yahoo.com
Just as moly prices were rising last week because of consumers
re-entering the market, tight producer supplies and
some delays in shipments from China due to the new licensing
requirements, the threat of Chinese export quotas
became a reality. The Chinese government will implement
quotas on exports of moly oxide and ferromoly on Mar. 1.
The size of the quotas has not been announced, but Chinese
producer sources confirmed that quotas would be imposed.
US ferromoly prices firmed during the week as traders
scoured the market for material. One trader said he had paid
as high as $28 per lb for a truckload. Another said he was
being quoted $27.50 early in the week. Producers confirmed
that they had received several inquiries from traders looking
for material. They also said that they had no material to offer
in the spot market. Consumer prices for FeMo were only
slightly higher, however, with some sales made in the high
$26s. Less than truckload sales were done at $27.50.
In Europe, the situation was similar. Inter-merchant FeMo
business was done at $61-61.50 per kg; consumer sales were
booked at $60 and slightly below. One mill claimed to have
bought early in the week at below $58. Less than truckload
sales of FeMo were done $62 per kg. The Chinese reportedly
raised their FeMo prices to $59.50-62.00 per kg.
Oxide prices also rose. A European consumer paid $25.10
per lb early in the week and briquette sales were done at
$25.50 per lb later in the week. Inter-merchant sales of oxide
were done at just under $25.50. Many oxide sellers said they
had raised their prices to $25.50.
A major US mill was in the market on Jan. 12 for two
trucks of oxide and two trucks of FeMo. This business could
put a lid on the price rally if the bids come in low. However,
most sources believe that the number of offers, especially for
FeMo, will be fewer and less aggressive than in the recent
past.
Sellers and consumers are trying to figure out whether the
price increase is a fluke or the beginning of a true rally. "I
think that emotionally, the market is ready to move
upwards," said one source, "but it may not yet have achieved
the strength some sellers are indicating." Some of the question
marks concern the level of consumer buying in the first
quarter and the willingness of Chinese suppliers to hold out
for high prices. Most sellers believe that there is more consumer
buying to be done. In addition, Chinese suppliers have
not strayed from market pricing during the past three years
and are unlikely to do so now.
Apickup in domestic moly production in China could have
sparked the government efforts to stem exports. Moly concentrate
production from state authorized mines rose 46% in
the first 11 months of 2006 to 86,895 mt compared to 58,687
mt in the same period of 2005. Through November, moly
production in Henan province, where Luomo is located, was
38,338 mt compared to 17,023 mt in the same year-ago period
and output at Shaanxi, where JDC is located, rose to
28,341 mt from 27,389 mt. Production in Liaoning increased
to 4,780 mt from 4,427 mt.
Moly concentrate suppliers in China have raised their
prices to $20.30-20.90 per lb from $19.80-20.30 per lb. This
has prompted FeMo producers to raise their domestic prices
to $51-52.50 per kg from $50-51. |
