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Message: Molybdenum upsurge continues as steelmaking alloys strengthen

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Molybdenum upsurge continues as steelmaking alloys strengthen

posted on Aug 09, 09 05:32PM

By Martin Hayes - Chief Correspondent, martin@minormetals.com (+44 (0)20 7929 6339)

London, 06 August 2009 - Molybdenum prices maintained their recent advances, setting fresh nine-month highs this week, helped by demand for both oxide and alloy, as activity in the usually slow third quarter continued to surprise.

Vanadium and tungsten alloys, which are also used to make steel, also rose, reflecting an improvement in the global steel sector.

"It is such a strong market - there is increased FeMo [ferro-molybdenum] off-take from consumers, while oxide [business] is mostly between traders," a trader said.

Molybdenum oxide (MO3), which has traded as high as $18.25 per pound this week, was indicated at $18.00/18.50, up around $4.00 over the last two weeks. FeMo jumped to $43.00/43.50 per kg, some $10 firmer, having traded at $43.00.

"The second quarter was when the market was at its worst - the third quarter is looking to be better," the trader said.

Many end-users were destocking earlier this year but this process is ending, and traders have been buying as restocking is expected, also in anticipation of an increase in off-take from steel mills in the final quarter of this year.

The upturn in demand has found the market tightly supplied after a welter of production cuts in the second half of 2008 in the face of the economic downturn - both from primary producers and copper miners, as molybdenum is a by-product of the red metal.

"Most Western molybdenum producers have little to no inventory, leaving traders scrambling - given the recent increase in demand outside China," JP Morgan Securities said.

Restocking by carbon and stainless steel producers in the developed world and still-healthy demand from China "should then lead to the next step-up in [average] molybdenum prices to $20 per lb in the fourth quarter of next year", it said.

In steel, prices of LME billet futures have risen to $415 per tonne, also the highest since November last year, underpinned by a "buy" recommendation on physical steel and prices issued by Goldman Sachs earlier this week.

In the other alloys, ferro-vanadium was quoted at $31.00/32.00 per kg, up some $3.00, while vanadium pentoxide (V2O5) was nearly $1.00 higher at $5.90/6.85 per pound. Ferro-tungsten reversed a recent drift - it traded at $27.00 and was indicated at $26.00/27.00 per kg. Ammonium paratungstate (APT) was indicated at a steadier $180/200 per metric tonne unit (MTU).

"This is mostly China upping the offers, but in ferro-tungsten some consumers on the tool-making side are seeing order books with a few entries now," another trader said.

(Editing by Mark Shaw)

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