There is good news for the future price of molybdenum. Since July, imports have been increasing as steel mills are starting to again purchase as the end of the usually slow summer period has passed.“Molybdenum prices in the Chinese market touched bottom at the end of August… There seems to be a future rise in price, and the inquiries from the users go on increasing… the sales volumes in these months [September and October] throughout the year will be highest,” reported the The Tex Report. Underlying Economic Weakness Overall, the uncertainty about the global macroeconomic climate still weighs on the market. The troubles in Europe are not going away. ArcelorMittal (NYSE: MT) has stated that the company has shut down their plant in Eisenhuettenstadt, Germany citing weak demand. There are signs that the Chinese economy is cooling off as well. According to a recent report from Bloomberg, “China's manufacturing may shrink for a third month in September, the longest contraction since 2009.” The report cited the HSBC manufacturing index which registered a 49.4 for September, 49.9 for August and 49.3 for July. The reading has been below the 50 point mark which separates expansion from contraction. In an effort to rein in inflation the Chinese central bank has raised borrowing costs and reduced lending. China has joined other Asian economies in tightening monetary policy as the global economic recovery appears to be stalling because of Eurozone debt concerns and the increasing risk of a US recession. While some have predicted a dramatic contraction to the Chinese economy, Chang Jian, an economist with Barclays Capital in Hong Kong stated, “[T]he fact that the number is hovering around 50 should reduce concerns over a sharp slowdown.” With the turmoil surrounding the economy any investor are right to remain cautious. Prices for molybdenum fell to roughly $8 per pound after the financial collapse in 2008. The price of moly has been trading flat around the $14 mark for most of the year, and while no analysts predict a return to the $8 level, most are waiting to see what direction the global economy will turn next.
I, Michael Montgomery, hold no positions in any company mentioned in this article. Molybdenum Price Weak Despite Strong Steel Production from Moly Investing News