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Many molybdenum firms benefited from higher prices for moly in 2010 as well as massive investments from moly hungry China. Backed by growing steel demand from the urbanization of China, moly prices rose from the abysmal $8 lows in 2008 up to $18 per pound in April 2010, prices have since settled to around $16 per pound.
By Michael Montgomery—Exclusive to Moly Investing News
Molybdenum, mainly used in hardening steel alloys, was driven by the increase in steel production in China during this period. Robust growth from the country, when most other economies were and still are trying to get back on their feet was a saving grace. Prices have since settled down to $14 in July, but have made modest gains since. Prices, at the end of last week showed “molybdenum oxide at USD 16.00 to USD 16.30 per lb of Mo and ferromolybdenum at USD 40 to USD 41 per kg of Mo,” stated the article on Steel Guru.
Reports about contracts for 2011 are mixed. While steel demand in China is predictive to rise along side projected GDP growth, inventories of moly remain high, reducing the need for large scale imports. Steel demand outside of China is uncertain as economic woes persist. However, fearing a price increase, buyers have sought long term contracts as opposed to fluctuating spot market prices. “In Japan and Europe, consumers and traders fearing possible tightness in moly oxide next year due to the limited amount of new production capacity coming onstream, have increased contract purchases,” reported Mayumi Watanabe, for Platts.
One potentially major development that may boost moly prices is the classification of moly as a “national mining resource,” where China could control production along the same lines that they do for rare earth production. This development was covered on Rare Earth Investing News last month. The classification may limit the amount of mining allowed and may also come with the creation of a strategic reserve of moly along with 10 other metals. While there is no official statement yet on this policy, it is something to watch for in 2011. The reduction of mining and the creation of a strategic stockpile may mean that China will once again become a net importer of moly in 2011 and beyond. This helped double the price of moly in 2009-10, and may do the same in the future.
Molybdenum Mining Company Trends
While not all molybdenum mining firms can be represented, this is a synopsis of share prices for some major molybdenum firms in 2010. These numbers reflect changes from Jan. 4, 2010-Dec. 14, 2010.
Thompson Creek Metals Company Inc (NYSE:TC)( TSX:TCM)
NYSE Share Price: $13.59 YTD:+$1.87 (+15.96%)
TSE Share Price: $13.67 YTD: +$1.34 (10.87%)
Teck Resources (NYSE:TCK)
Share Price: $57.47 YTD: +$22.50 (+64.34%)
Ivanhoe Mines Ltd. (TSX:IVN)
Share Price: $24.65 YTD: +$9.14 (+58.93%)
General Moly (AMEX:GMO)(TSX:GMO)
AMEX Share Price: $5.39 YTD: +$3.31 (+159.13%)
TSE Share Price: $5.44 YTD: +$1.36 (+33.33%)
Moly Mines (TSX:MOL)
Share Price: $1.05 YTD: +$0.24 (+29.63%)
Taseko Mines Limited (TSX:TKO)
Share Price: $5.22 YTD: +$0.77 (+17.3%)
Before the news that Ottawa was putting a halt to Taseko’s Prosperity Mine, the share price was at $6.55. On November 2, Ottawa announced “it would block the project on grounds of the environmental damage… Nineteen days before that, Taseko shares dropped as much as 32 percent. The plunge sparked immediate concern within the federal government ministries,” reported Frank McGurty, for Reuters. The company is under investigation for this drop.