well spoken TFalk

in 2011 it will rise to above $20 as demand rebounds

Molybdenum seen weak in 2009 but recovery in 2011

4-MAR-2009 16:13

By Michael Taylor

LONDON, March 4 (Reuters) - Molybdenum prices will stay low at between $10.50-$11 a lb this year because of weak demand from steel makers, but in 2011 it will rise to above $20 as demand rebounds, U.S.-based CPM Group said on Wednesday.

Douglas Horn, commodity analyst at CPM said global stimuli packages will help boost prices of molybdenum, a byproduct of copper, to around $16 in 2010.

'There is a large amount of government infrastructure spending coming online,' he said at a conference organised by the London Metal Exchange (LME) and Metal-Pages.

'Our estimates indicate that over $700 billion will be poured into the market on the infrastructure side.'

Molybdenum prices currently at around $9 are down from around $34 a lb last August.

'They fell for a very good reason -- there has been a deep drop in steel production,' he said. 'The fourth quarter (of 2008) was particularly bad for the stainless steel industry and they are the largest moly consumer.'

Horn said 70 percent of molybdenum demand comes from steel production and output cuts during this slowdown had exceeded previous recessions.

On the supply side, Horn said there was a big bulge of 'probable development projects' in 2012, but they would depend on financing.

'But once re-stocking resumes ... (any upturn) could be very drastic, very swift and demand for molybdenum could be quite strong,' he said.