Molybdenum Price Weak Despite Strong Steel Production
While steel production has remained strong in China and North America, the price of molybdenum has remained weak. China became a net importer of molybdenum in 2010, however, on the year the country is a net exporter of the metal. This trend however may be reversing.
By Michael Montgomery—Exclusive to Moly Investing NewsThere is currently a dichotomy between the price for steel and the metals critical for the steel alloys. While the price of iron ore and steel are remaining firm, metals like molybdenum have been experiencing weakening prices. While steel production has grown on the year worldwide molybdenum prices have not reflected the growing demand. China's move away from a net importer of moly may be to blame for the divergence between steel and molybdenum prices. Steel production remains strong, however, uncertainty over the global economy and a slowing China are still the main concerns in the market. Chinese moly market data Steel production in China remains robust despite tightening credit markets and fears of a slowing economy. The Chinese Iron and Steel Association (CISA) released data showing that steel production in September was up 3.1 percent from August. The total annualized run rate of production is over 700 million tonnes, compared year-over-year with China produced just over 550 million tonnes of steel in 2010. Global steel production growth rate stands at 9.8 percent, while China is pushing 13.8 percent. The continued strength of steel production in China would suggest that molybdenum, an essential in high strength steel production would also exhibit strength. However, Chinese exports of molybdenum outpaced imports over the first five months of the year, holding down prices. While the trend has been reversing since July; year-to-date molybdenum exports total 15.097 million pounds, while imports stand at just 10.512 million pounds. Last year, China was a net importer of over 35 million pounds of moly, while exports a totaled of over 30 million pounds. This reversal of China away from a net importer of molybdenum on the year is a main factor behind the downward pressure on prices.