|Molybdenum prices expected to double in 2010|
J.P. Morgan says supply squeeze will to push moly prices higher
Tom Stundza -- Purchasing, 7/21/2009
Molybdenum prices have averaged slightly more than $9/lb so far this year but an analysis by J.P. Morgan Securities warns "expect moly prices to close in on $15/lb over the next several months and to average $18/lb in 2010."
The forecast from New York-based analyst Michael Gambardella suggests that "most Western molybdenum producers have little to no inventory, leaving traders scrambling--given the recent increase in demand outside China." 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 moly prices to $20/lb in the fourth quarter of next year."
In previous market analysis, Gambardella has bullishly predicted that "the steel industry has reached a positive inflection point" so he sees "improving fundamentals throughout the back half of this year" and in 2010.
The significant decrease in global molybdenum demand driven by lower purchasing from the stainless steel, specialty steel and petrochemical industries has depressed moly prices in 2009 to an average $9.40/lb through this month from $30/lb annual averages in 2007 and 2008. Supply has fallen in the face of reduced purchasing.
Gambardella says supply discipline is expected in 2010, which would drive moly prices higher, even if non-Sino world steelmaking demand improves. He also says he isn't looking for any new moly projects to come on line until at least 2011.