Last Tuesday, molybdenum at $ 24/pound be traded if would be a Chilean Copper Commission spokesman prognosis of the metal to an average of $ 20/pound this year. But on Thursday, Platts Metal Daily reported molybdenum oxide trading higher: $ 24.80 to $ 26/pound.
We asked about the price rallies of various metals, we are following in the hope of understanding some of the emotions behind the excitement. Being skeptical about starting some of this sound like mob hysteria. On the sunny sideof the fence you could call this exuberance. Cui bono is our question. Who benefits?
The utilities hope to nuclear fuel for its reactors, a rising uranium price and the reduced ability SEEs will be made available to to tighten their needs, concerns about whether the nuclear renaissance will realistically be considered just. Help for molybdenum, stainless steel and super alloys, increasing demand, the silvery metal well above the actual cost of production to me there. Plans for the constructionmore pipelines with stronger anti-corrosion adds a sexy energy twist to spice up what is required Raymond James mining analyst Bart Jaworski a boring story.
With uranium, there is excitement because a very small number of new short-term producers recently signed contracts future U3O8 production with increasing minimum protection, or simply sell yours Production / near the intake of uranium price. Of course, they benefit, and so have their shareholders. UraniumCompany hopes to produce in the next five to six years, higher prices are likely to attract deep-pocket joint-venture partners, their mines in production or development can continue to bring. Or simply to raise more money for government coffers by selling shares at a price that they would probably never be possible two years ago could imagine. To the physical uranium speculator, it has a double, triple or higher-digit 'paper return provided' on an investment.
The point of increasingMetal prices was to encourage new production in the respective industry. In the case of molybdenum, the metal is the price a great deal from a relatively small number of western hemisphere copper producers like Phelps Dodge (PD), BHP Billiton (BHP), Teck Cominco (TCK) and Chilean Codelco, the state dictates. And of course the eastern hemisphere wild card: China. Molybdenum can be a by-product of copper mining, which is basically produced for little or no cost. Apart from a very small number ofnew short-term primary molybdenum producers, where is the excitement in this area?
It is not included. In an earlier interview with Michael Magyar, USGS molybdenum specialist, he told us, "The price is now trending anywhere. It's only drive about $ 25/pound." Another industry expert agreed price is expected for this new level for a while . stagnate
Despite the ranting of some, molybdenum oxide is unlikely to soon return May to July 2005 highs around$ 40/pound. The price anomaly was caught just that - an industry cold too quickly and producing too little. And within a period of six months come with itself. Similar to these projects, we have the investigation into the uranium sector, who are hoping and praying for another supersonic price rise in molybdenum are the support of the more marginal mining projects. After all, if you do not have economic grades, a parabolic price rise is just the right shade of lipstick for the pig someCompanies hope that farmers from the unwary.
Last month, Seeking Alpha published an article that we submitted to them: "In the case of uranium stocks, May Smaller be better." The problem of impact on the larger uranium companies such as Cameco Corp. (CCJ) and ERA (Australia) are the old contracts in which utility companies will continue to receive less than $ 30/pound uranium, and 20/pound in some cases for less than $. Following ERA recent record sales in the fourth quarter of U3O8 production, the Australian mediaraised Down Under miner had missed mainly due to the record price of uranium, because this long-term contracts.
With molybdenum, the smaller projects are better in terms of opportunities, investors must choose. Early November in a two-part series, we interviewed William G. Cook, the North American representative for Derek Raphael & Company - currently the world's largest molybdenum trader. He advised us, "I do not think we will see one of the MolyMega-deposits, developed in the foreseeable future. "
Koch warned of the considerable investment costs, reclamation liabilities and operating costs for the gigantic projects. Instead, he pointed to the smaller, higher grade primary molybdenum. It is where he sees the future of moly production as a complement to byproduct and Chinese production. His focus was on "higher" class deposits. As with other industry experts we interviewed, it is the lower grade deposits, whichEyebrow lift the experts.
Where the price is hysteria come from?
Molybdenum is heavily on steel production. According to the recently published U.S. Geological Survey, Mineral Commodities Summaries, producers of iron, steel and superalloys consumed 74 percent of the molybdenum mined in 2006. Movements in stainless steel demand can impact the moly price.
Before the holidays, the prognosis of the prestigious consulting firm MEPS higher movement in stainless steelSteel prices. Increase in nickel prices on the London Metal Exchange (LME) in December were likely higher transaction values for stainless steel, cited in the second quarter of this year.
Since this week the distribution of the nickel-copper is the world's fourth-largest miner, Switzerland-based mining giant Xstrata (XSRAF), a mining strike in Sudbury, Ontario, where the company does not come with a group of 1,000 workers Vote on Tuesday to end the strikeMonth. In a similar type of strike nearly two years of copper production fell by 9.6 percent on quarter purchased at a Falconbridge processing plant (Xstrata Falconbridge since then).
On Thursday, nickel touched a record high of $ 36,050 per tonne, as relates to this strike. Approximately two thirds of the world's nickel mining is used to make stainless steel. Some analysts expect steel production to grow by 7.5 percent this year. Concern in the commercial market is down 87 per cent ofthe stocks held in LME warehouses of nickel a year ago. A bit more than a day of global consumption is now stored by the LME. Of course, a short squeeze roiling the nickel market. And the impact could spread as the price perception panic moves in other alloys through the production of stainless steel markets.
But where to find the substance with respect to the quantities of molybdenum? The market has worsened in January because of new export markets, China's licensing system.This can only be a temporary blip in food from the dealer chain.
In a July 2005 article for Colorado Central Magazine, author and former Voynick molybdenum miner Steve wrote: "... there's always written concern about the economic validity of price hikes, the sudden, short-term jumps that stand next to long-term price increases." In his article, argued Voynick for the reopening of the primary Climax Molybdenum Mine, but he warned against price stability for this metal, "In the past,Moly-market price spikes have shown little stability. Unlike long-term price, they are not so much on true supply and demand, as on fears of a shortage of molybdenum in speculative purchases are trace. "
In recent Moly boom, primary molybdenum mines produced 75 percent of supply in the world. Because of the rise in copper price, the majority of moly production as a byproduct of the leading copper mines in the world. Primary producers are now the swing producers,Filling the gaps in coverage, when it increased to a demand for molybdenum.
We would imagine companies planning to investigate molybdenum mines online by the end of this decade carefully to bring the price of copper and molybdenum. Australia's Olympic Dam faces a similar dilemma with their massive uranium forecasts. If the price of copper not keep a certain level, the low uranium could not be removed economically. Could in this case, BHP is likely to spend $ 5 billion inConstruction costs, the company expanded its uranium production.
Part of the suspense, we have heard from emerging moly companies about the price of the metal is not about how much higher molybdenum price will rise. Flashes through your concern for their projects, will be accompanied, as should the economic, moly dive as it in the past. Previous moly price rallies were sharp spikes followed by mercury descents. Breath-taking on a historical map, but not theImpact-on-the-laugh kind of knee, where it has been a mining during this period. Jobs were lost, swallowed up abandoned mines and assets of those who depend less on the moly price.
Why should molybdenum's price to get this time, and why this table should then look different than the one of the last three decades? Yes, yes, yes, of course, we are in a commodity super cycle. But even during a bull market there are catastrophic plunges washing out the weaker management teams,less well-funded and those with more dubious projects.
Should Molybdenum Sustain at current levels?
Recent developments in the molybdenum and energy markets may suggest the great hope for many of the major producers or planning to offer projects to 2010. Part of the reduction during the production cycle could be made of molybdenum roasting capacity. We covered those concerns in a previous article. Each year is over 37 billion U.S. dollars worth of natural gas pumped into smoke orU-Bahn to drive more crude oil to the surface, mainly due to lack of gas pipelines. According to Hart Energy Publishing's Pipeline and Gas Technology Information Center, "The operators are construcing, planning or studying the feasibility of building some 72,924 miles of crude oil, natural gas and refined products pipelines in the world's growing energy needs." Nearly 77 percent of the global construction of the pipeline will transport natural gas - more than 55,000 milesplanned or underway. Under construction or planned with nearly 14,000 miles of oil pipelines.
Intrinsic to the future and lasting success of these pipeline projects is the emerging trend towards the replacement of Type 316 stainless steel with a higher content of molybdenum steel product called 6Mo degree, or 6-percent molybdenum stainless steels. Because of the increased construction of offshore and sour gas pipelines, great resistance to chloride-induced corrosionrequired. Stainless steels are iron-chromium alloys, in fact, the brunt of the protective film comes from sufficient chromium. Type 316 Stainless Steel contains 16 percent chromium and 10 percent, two percent nickel and molybdenum.
Type 316 has broken down when exposed to salt water, sea water or brackish water. Sour gas is a high halide levels (excess benzyl halide and alkyl halide) which can accelerate the corrosion of metals. 6Mo The class is 50 percent stronger than the300-series and has a very high resistance to corrosion, pitting and crevice corrosion stress. The higher molybdenum content is generally found in desalination equipment, flue gas desulfurization scrubbers, chemical plants and oil / gas equipment.
Here is the central point of this chemistry lesson. Because of the high nickel price, now approaching the status of precious metals, the structure of austenitic stainless steel alloy can be maintained, but withlower nickel and molybdenum. In other words, because of the tight nickel inventories have started Manfacturer hunt for a replacement for this metal. In several situations could power its way Moly metal as a "substitute" for nickel in the production of stainless steel.
Molybdenum strengthens the nickel matrix and extends service temperatures. In the extreme case, the nickel-based Alloy C-276 ® contains 15 to 17 percent molybdenum and is used for the construction isSeawater-based flue gas desulphurization plants. The higher moly content offsets the highly corrosive combination of seawater and sulfur-laden flue gases. As the major energy companies take a dip into the crummier fossil fuels, the sulfur content rises, thereby ultimately demanding a greater share of the molybdenum component.
From this point it may be merit the molybdenum price could provide some excitement to the end of the decade, and perhaps offer some promise for some, if not all,the junior molybdenum exploration and development company. Coupled with the roasting capacity problem, as we in the previously referenced article, this molybdenum cycle offers more hope of longevity than the two previous spikes.
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