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Low demand kept molybdenum prices low in 2012, but the next few years may deliver improvement.
2012 was a year of reduced demand and declining prices for molybdenum, Research and Markets’ Global and Chinese Molybdenum Industry Report, 2012-2015 states, but that situation began to look up at the end of the year.
The report, released in April, states that the average 2012 price for molybdenum was US$12.74 per pound, a 17.5-percent decline from the previous year. Global output clocked in at 229 kilotons, while consumption came to 225 kilotons. That balance is expected to be unsettled this year on the back of a decrease in molybdenum ore and an increase in demand from steel mills at the end of 2012.
The results of Research and Markets’ report are similar to those presented in Roskill’s Molybdenum: Market Outlook to 2016 study. While the firm expects the molybdenum market to be in surplus for the next several years, it sees positivity in both the fact that the global market for the metal should grow by 60 kilotons per year until 2016 and that many projects in the works are likely to experience delays.
Roskill believes “production costs in excess of $12/lb in the large Chinese molybdenum-only mining industry” are likely to provide prices with “an effective floor.”
Price update
The price range for 65- to 70-percent US spot ferromolybdenum on an in-warehouse basis sat at $12.10 to $12.30 per pound during the first week of May, and has strayed little since then, Metal-Pages reported. Currently it trades between $12 and $12.30 per pound.
Prices for 45-percent grade molybdenum concentrate declined from 1,580 to 1,610 renminbi (US$257.84 to 262.74) per metric ton unit (mtu) in mid-April to 1,540 to 1,570 renminbi ($251.31 to $256.21) per mtu on May 9, according to Metal-Pages. A Henan-based producer source told the publication, “[p]rices have fallen owing to a dearth of consumer buying as a result of sluggish molybdenum industry demand.”
The metal’s price continued to decline throughout the month, falling to a range of 1,520 to 1,550 renminbi ($248.05 to $252.95) per mtu on May 17 and then to 1,500 to 1,530 renminbi ($244.79 to $249.68) per mtu about a week later. A molybdenum mine source in Liaoning explained to Metal-Pages that the issue is still “[w]eakening demand from the molybdenum industry.”
Most recently, the price range for the metal came in at 1,480 to 1,520 renminbi ($241.52 to $248.05) per mtu.
Company news
Midway through May, US-based General Moly (TSX:GMO,MKT:GMO) terminated its $125-million subordinated loan agreement with Hanlong (USA) Mining Investment; it was intended to finance the company’s fully permitted Mount Hope project. The termination was mutual, and a company press release states that it will make it easier for the company to secure an additional Chinese partner. Bruce D. Hansen, CEO of General, stated that the company’s prospects for finding a such partner include “a number of parties in China.”
A week before the announcement, iStockAnalyst reported that disruptions in financing the project had brought General’s share price down 56 percent year-on-year. Now, a month later, the company is trading at $2.06 per share, down from its 52-week high of $4.25, suggesting that it will not rise again until General gains a partner.
Desert Mines and Metals (ASX:DSN) announced on Monday the acquisition of Korean Resources, whose subsidiary has contractual rights to acquire the South Korea-based Daehwa molybdenum-tungsten project. The next day, it provided an exploration update for the project, noting that narrow intervals of high-grade molybdenum mineralization and wider intervals of low- to moderate-grade molybdenum mineralization have been intersected by diamond drilling.
Avanti Mining (TSXV:AVT) received notice on May 21 of a Federal Court application by the Nisga’a Nation. It challenges a Fisheries and Oceans Canada decision that deems “certain waters in the area of the tailings impoundment facility” proposed for the company’s Kitsault mine are “not frequented by fish” and wants that decision to be reversed. The group believes it was not properly consulted and that “the Crown breached its obligation to evaluate the environmental impacts” of the decision.
The Nisga’a Lisims Government initially registered its disapproval of the project in March, just days before Avanti received environmental approval for the Kitsault project.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment in any company mentioned in this article.
Related reading:
Avanti Responds to Nisga’a Move on Kitsault Moly Mine
PROJECT UPDATE: Kitsault Mine Granted Environmental Permit