Key Takeaways from the IMOA’s Annual General Meeting

At the International Molybdenum Association’s (IMOA) annual general meeting, held last month in Salt Lake City, Utah, a number of experts analyzed the moly market and presented their outlook for the metal moving forward. 

Here’s a look at the key takeaways from presentations by Markus Moll, managing director at SMR Steel & Markets Research, and Catherine Virga, director of research at CPM Group.

Demand drivers

Moll spent much of his presentation discussing where future demand for molybdenum is likely to come from, stating that the oil and gas industry is currently the most important source of usage, accounting for 20 percent, as per Metal-Pages. “It was always your good friend. Now it’s your best friend,” the publication quotes Moll as saying.

Specifically, he said that gas exploration, particularly deepwater projects, is “seeing increasingly stringent equipment specifications,” and those are leading to increased demand for molybdenum. He also mentioned the automotive sector and mechanical engineering industry as other larger sources of demand for the metal.

For her part, Virga said that emerging markets “will remain the dominant drivers of growth,” while technological innovation — for instance, from computer manufacturers — should account for “the next big wave of consumer demand.” She sees demand for moly growing by 2 percent this year, to 570 million pounds.

Potential concerns

Virga explained in her presentation that one thing that may hamper the moly market is rising interest rates, “especially in the United States where the Federal Reserve may start to taper off its economic stimulus programme or employ other tools to mop up excess liquidity.”

Across the globe, there is some anxiety that “a crackdown on shadow financing” could direct high-risk debt to China’s formal lenders, “leading to knock-on effects for the construction and associated sectors,” Metal-Pages quoted Virga as saying.

One bright spot is that according to Moll, while cheaper nickel pig iron has caused problems for producers of nickel and stainless steel, as yet there is no process for creating molybdenum pig iron.

Prices

Though the antitrust rules governing the IMOA’s event kept presenters from making price predictions, Virga was able to discuss in broad terms where she believes moly prices are headed.

Metal-Pages notes that she “maintained her market surplus outlook from July,” and said although the market is recovering, she isn’t particularly optimistic about moly prices this year — she expects them to perhaps reach $11 per pound. That’s in line with predictions put forth this summer by Stephan Ioannou, an analyst at Haywood Securities, and John Tumazos of Very Independent Research.

For now, prices are below that level for the most part. Yesterday on the US spot market, ferromolybdenum was trading between $11.15 and $11.40 per pound for standard 65- to 70-percent material, while spot molybdic oxide prices were sitting at an average of $9.30 per pound, according to Metal-Pages. Roasted molybdenum concentrate was selling for $9.20 to $9.40 per pound.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

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Look Beyond 2013 for Moly Market Recovery, Analysts Say