Expect volatile Molybdenum prices - analyst
Chinese stock piling of the metal could see it drop as low as $10/lb and jump has high as $20/lb
Posted: Thursday , 03 Sep 2009
SANTIAGO, (Reuters) -
The prices of molybdenum, a mineral used to strengthen steel, would face short-term volatility as top producer China turns into a key importer of the silvery metal, a Chilean expert said on Tuesday.
Molybdenum, which is obtained mostly as a byproduct of copper, has seen prices more than double to around $17 per pound in recent months, but still far from $34/lb highs reached in 2008.
Pablo Bascur, an industry consultant and former executive at world's top copper producer Codelco, says demand for molybdenum will likely pick up later this year and in 2010 as the worldwide financial storm eases.
However, China's heavy stockpiling seen this year could keep prices from finding their footing.
"I hold the view that we will continue to see high volatility in at least the next three quarters because this stockpiling will take some time," said Bascur in an interview.
"I believe we will have periods of very low prices at $10/lb, but I also don't rule out prices over $20/lb."
He said the metals' price could even peak to pre-crisis levels, but China will keep markets guessing with its rising molybdenum inventories.
Molybdenum prices could fall quickly if China's stocks are sold-off.
Bascur's company, MolyExp, posted a brief on its molybdenum market study at www.molyexp.com/.
Chile is one of the world's top producers of molybdenum that is used to make aircraft parts, electrical contacts and industrial motors.
Other industry analysts also have predicted a recovery in molybdenum prices on rising optimism about the speed of the global economic recovery.
Chilean government copper think tank Cochilco forecast prices for molybdenum at around 10/lb in 2009.
(Reporting by Alonso Soto; Editing by Carol Bishopric)
