Moly squeeze continues
A shortfall in molybdenum roasting capacity, a key factor in keeping spot prices well above $20/lb for two-plus years now, will continue for the immediate future, says metals consultancy Roskill Information Services.
Although prices in 2006 probably will be somewhat lower than the $32 average for 2005 in the U.S., "sales tags are not expected to return to their pre-2004 levels," says the Roskill report, "and will be underpinned by limited roasting capacity and firm demand, particularly in China." Between 1982 and 2003, molybdenum averaged $3.50/lb in the U.S. market. The price exploded to $16 in 2004, the year that demand virtually exploded worldwide for the nonferrous alloying metal.
London-based Roskill says that while concentrate supplies had been plentiful, with mine output in surplus to demand in 2004 and 2005, there was a deficit in usable molybdenum because of limited roaster capacity. The market researcher also notes that only six roaster projects with a combined capacity of just 42,000 metric tons/year are being evaluated. Roskill projects world molybdenum demand growth of 4% annually for the rest of this decade, fueled by Chinese demand for molybdenum in stainless steel. However, the report also says: "No major new capacity that is independent of new mine supply appears likely to come on stream before 2009."
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