Mining Outlook: MolyExp Releases Report: Unusual Stock Accumulation in China Will Be Key to Molybdenum Market Evolution

SANTIAGO, Chile -

- According to Pablo Bascur, MolyExp managing partner, the incipient recovery of moly prices is not a response to an increase in consumption, and that China will play a key role in upcoming quarters

The incipient recovery of molybdenum prices observed during 2Q09 does not respond to a true increase in consumption. According to Moly Market Outlook, a study conducted by the consultancy firm MolyExp, the enormous and unusual accumulation of molybdenum inventories in China during 1H09 will play a key role in moly prices in future quarters.

Pablo Bascur, managing partner of MolyExp, explained, “For example, Chile’s total molybdenum production for 2008 is equivalent to the amount of the excess of stock accumulated in 1H09. It is interesting to note that in this period, 40% of Chilean molybdenum oxide exports were shipped to China, while no molybdenum oxide was shipped to that country in 1H08.”

The report highlights the prominent role played by China in the molybdenum market, in which it went from being the primary global producer in 2008, with exports of 25 million pounds, to becoming a net importer in 1H09, acquiring 35 million pounds from Western operations and absorbing all the excess stock in the rest of the world.

“The tight market in the West has doubled the prices between April and August of this year, despite the fact that for the first half of 2009, the apparent consumption in the West decreased over 40% with respect to the same period in 2008,” Bascur concludes.

Regarding future prices behavior, Bascur says that depending on how those stocks are managed, “We may see a high level of volatility over the next few quarters. In fact, we do not rule out prices as high as US$20 or 30 per pound, but prices could also go lower than US$10, as we recently observed.”

For its 2009 report, MolyExp makes projections regarding demand, analyzes projects likely to materialize, and considers the evolution of supply and prices, as well as examines China’s role in the next eight years.

All of the information regarding future prospects for molybdenum for the 2009-2017 period are available to market analysts and industry experts at www.molyexp.com.

Source: MolyExp

Gonzalo Valenzuela, Extend Comunicaciones, +56-2-437-7700, gvalenzuela at extend.cl, for MolyExp