Molybdenum price expected to keep increasing by 12% in 2011

BEIJING (Asian Metal) 17 Jan 11- In view of the increasing demand for molybdenum from energy industry and aircraft industry, it is predicted that the molybdenum price would continue to move higher in 2011, keeping a moderate rate at around 12%. Molybdenum oxide price dropped all the way down to USD10/lb from USD33.5-34.5/lb due to the global economic crisis, arriving the lowest at USD7.5-8.0/lb in April 2009, however, after the recovery in the second half year of 2009 and the whole 2010, the present molybdenum price reaches USD17.00/lb.


The molybdenum price rises up in a winding and vibrated way instead of the expected smooth and rapid manner. It is predicted that the molybdenum price would increase further as the present trend with fewer frequency than that of 2010. The average price for molybdenum increases by 12-13% finally from 2009 to 2010, despite of slow speed on the recovery. To take the domestic market for example, the average molybdenum price in 2010 increased by 12.5% than that of 2009.


The average price for molybdenum concentrate 45%min and ferromolybdenum 60% in 2008 in China: RMB3,990/mtu and RMB270,000/t.


The average price for molybdenum concentrate 45%min and ferromolybdenum 60% in 2009 in China: RMB1,880/mtu and RMB130,000/t.


The average price for molybdenum concentrate 45%min and ferromolybdenum 60% in 2010 in China: RMB2,115/mtu and RMB145,000/t.

Market keeps rising, but surge starts to slow

London 14 January 2011 16:18

All the Metal Bulletin Ferrous Scrap indices rose again this week.

The Metal Bulletin Ferrous Scrap Index Turkey finished Friday at $509.36 per tonne cfr Iskenderun on an HMS 1&2 (80:20) basis. This is a rise of only $1.18 per tonne as the deep-sea market fell silent following the hikes of recent weeks.

But Friday's number is still an all time high. The daily index had risen by more than $40 per tonne since the beginning of the year but the surge in cargo bookings came to an abrupt end on Friday last week, with only small-sea deals going through.

A few recyclers in Europe have now started offering lower prices. While many recyclers believe there is some strengthening still to come due to continued collection difficulties, the lower offers could signal a tipping point in the Turkish import market, prompting a fall for the first time since the price surge began in mid-October.

In northern Europe, the MB Ferrous Scrap Index fob Rotterdam rose to $482.31 per tonne on an HMS 1&2 (80:20) basis. This is a rise of $12 per tonne and means that the index has now risen more than $50 per tonne since the beginning of the year.

The MB Ferrous Scrap Index India has pushed up strongly again to $493.06 per tonne cfr Nhava Sheva for shredded material. This is an increase of $31.81 per tonne on last week. A traditionally slow market for trend following, Indian mills have been staving off scrap hikes by sourcing from local DRI supplies. Indian imports have shown signs of catching up with the Turkish cfr level this week though. As with prices FOB Rotterdam, prices into India have pushed up more than $50 per tonne since the start of the year along with falling freight rates.

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Summarization and outlook of key market developments - America

USA Market

Scrap

Export activity of US scrap collectors is at its height now. Suppliers intend to take full advantage from buying activity in foreign markets and sell leftover of their ferrous scrap with maximum profit. As a result, HMS 1&2 (80:20) is available from ports of US east coast at $475-480/t FOB against $445-450/t FOB in late December. Shredded scrap is currently quoted at $480-485/t FOB, $30/t up from the end of last month. Quotations of higher-quality P&S material have also reached new highs –$485-490/t FOB east coast, $25/t up in two weeks. HMS 1&2 (70:30), which is least in demand, is offered at $470-475/t FOB against $440-445/t FOB in late December. US traders believe that export quotations of scrap will keep growing until late January, as new contracts with foreign buyers are expected. Demand for the material is high also in the US domestic market. This week steelmakers have raised their purchase prices by $60-70/t, striving to buy local scrap, while its supply is falling rapidly. Some producers need the material to fulfil orders for finished products so much that they are forced to import it from Europe.


Pig Iron

By the moment Russian suppliers have managed to gain the highest profit, having signed the most recent contract at $550-555/t C&F New Orleans. The material of February production will be reportedly delivered in March. At the same time, some Russian exporters maintain desired price levels, announced in late December – $575/t C&F New Orleans. Current prices only surprised customers three weeks ago, but now these levels seem to be more reasonable. Noteworthy, the material will be shipped by Russian suppliers in March and will be delivered by Panamax ship, the cost on FOB terms is $550/t. Currently suppliers from Brazil are ready to deal at $550/t C&F with late March-April shipment. Notably, market participants forecast low utilization rates of BFs (30-35% from designed capacity) will remain for at least one or two months due to heavy rainfalls, which significantly complicates charcoal supply to plants. The latest deals for Brazilian material have been made at $525/t C&F. The material will be delivered in March from northern ports of Brazil, where its prices are about $507-510/t FOB Ponta de Madeira.


Brazilian Market

Iron Ore



Upward trend continues in both export and domestic iron ore markets in Brazil. 64.5% Fe fines have gained $10-11/t this week and are being shipped at $162-163/t FOB Rio de Janeiro ($180-181/t C&F northern ports of China). At the same time, lower-quality material (62% Fe) is offered at $145-147/t FOB. Notably, the difference in prices, which depends on the quality, is determined in the following way: 1% = $5. As for long-term agreements, Vale has reportedly raised contract prices for January-March 2011 by 8-9% against similar levels in September-November, and thus the material will be shipped at $145/t FOB.

Summarization and outlook of key market developments - Far East

Chinese Market

Scrap

In particular, prices for HMS 1 in the east of the country have reached the peak level – RMB 3,500/t delivered by this week, which corresponds to $527/t delivered at the current exchange rate $1 = RMB 6.63. Hereinafter local prices include 17% VAT. As earlier reported, quotations of the same material were within the range of RMB 3,280-3,300/t ($495-498/t) delivered in late December. At the same time, producers differed in their pricing strategy last week: a number of companies raised offers a few times, while others decided to hit new levels by implementing a single lift. In particular, the largest consumer of scrap Shagang, who has been keeping its purchase prices unchanged for a long time, have increased quotations by RMB 250/t ($38/t) at the end of last week, so its levels are at the top in the region now – RMB 3,530/t ($532/t) delivered. Plants of the Central region are make somewhat lower offers and those in the south have moved their prices for HMS 1 up to RMB 3,350-3,450/t ($505-520/t) delivered by the moment. In particular, Japanese trading companies are ready to sell HMS 2 at $460/t C&F on average, which means about $545-550/t including 17% VAT on imports and average delivery costs, while in late December their offers were not higher than $440/t C&F ($518-524/t CPT). Besides, high export activity amid stable domestic market allows US suppliers to boost quotations of shredded scrap to the Far East up to $490/t C&F ($583/t CPT) against $460/t C&F ($545-550/t CPT) two weeks ago.

Iron Ore

Prices for Indian ore fines (63.5% Fe) are varying in the range of $180-182/t C&F northern ports of China, by $3/t higher than in early January. Traders say 62% Fe content material has been changing hands at $177/t C&F, up $3/t w-o-w. The material of lower quality has been sold at $98-99/t C&F. Offer prices for Indian high quality ore fines (63.5% Fe) keep climbing higher and have by now come close to $183-184/t C&F. The current trend persists mostly due to higher quotations in the finished product segment in China amid still limited iron ore supply. Besides, high activity of steelmakers, who continue making deals, thus fixing the current prices supports the tend. Australian suppliers have been pushing their offers up as well – $174-176/t C&F for 61.5% Fe content fines, against $172-174/t C&F in early January. Australian company Mount Gibson has reportedly managed to sign a contract for supply of ore fines (62% Fe) at $181/t C&F. Nominal prices for Brazilian 64% Fe content material are $175-176/t C&F. Canadian (67% Fe) and Indian (63% Fe) pellets are currently priced at $210/t C&Fand $200/t C&F, respectively.

Japanese & S. Korean Market

Scrap

Export trade is becoming ever more attractive to Japanese scrap collectors. In mid-January importers’ interest in additional volumes of the material has risen, which has been reflected in higher purchase prices. South Korean holding Hyundai Steel is already bidding JPY 38,500/t FOB for Japanese HMS 2, which means $464/t FOB at the exchange rate $1 = JPY 83.005. A week earlier the material was priced at JPY 36,000/t
($434/t) FOB.

Companies from South Korea prefer to buy Japanese material in mid-January. In particular, Hyundai Steel have booked about 30,000-40,000 t of HMS 2 at $464/t FOB which means $490/t C&F including transportation costs. At the same time, large batches of similar material from Japan were available at $440-450/t C&F Pohang, Inchon, Kunsan in late December. Improving US domestic market pushes export prices for US scrap up. As a result, currently, containerized HMS 1&2 (80:20) is being offered to South Korean importers at $465-470/t C&F Pohang, Inchon, Kunsan, by $40-45/t up from late December. Large lots of HMS 1 can be shipped at $515-520/t C&F against $450-455/t C&F at the end of last month. Russian scrap collectors have decided to follow the same pricing policy. So, large lots of Russian A3 material are being offered at an average of $495/t C&F Pohang, Inchon, Kunsan, by $40-45/t higher than two weeks ago.

Indian Market

Scrap

Indian steel scrap importers refuse to cooperate with US and EU exporters considering their offers unacceptable. Market sources say deals for large batches from these regions are unlikely to be made in the short term, since Indian buyers are hardly interested even in small quantities. By now, prices for EU HMS 1&2 (80:20) have moved to $480-490/t Ñ&F Nhava Sheva, up $30-40/t w-o-w. Similar material from the USA is available at $485-495 Ñ&F Nhava Sheva, against $450-455/t Ñ&F in early January. Offers of shredded scrap have been coming from the EU at $510/t Ñ&F Nhava Sheva, while a week ago the material of higher quality was priced at $460-470/t Ñ&F. US scrap collectors insist on further increases too, offering shredded scrap at $515/t Ñ&F Nhava Sheva, up $50-55/t w-o-w.

Fast Eastern Pig Iron Market

Pig Iron

Contract prices in the pig iron market have inched up in the first half of January. Thus, one of the Taiwanese buyers has reportedly purchased 10,000 tonnes of import material at $500-505/t C&F from Posco (South
Korea), which exceeds the level of the latest contracts to this destination by $2-7/t. Currently, offer prices remain at the same level – $500-510/t C&F January-February delivery. Russian exporters have been raising their prices slightly as well, keeping them at the late-December levels ($500-510/t C&F ports of Taiwan).
Besides, some Chinese companies have received offers of Russian pig iron at $510-520/t C&F. Chinese traders are ready to ship Brazilian material from Chinese ports at $500-510/t C&F Taiwan. Traditionally, traders have been the most active in raising prices, which is reflected in their current offers. Thus, Stemcor is
reportedly ready to deliver pig iron at $535/t C&F ports of Taiwan, which is by now the highest quotation.
Indian material is available to Far Eastern consumers at $520-530/t C&F ports of Taiwan and South Korea: 33,000 tonnes have been exported by Vizag Steel through a tender at this price, January-February delivery. The highest bid came from trading company VISA Comtrade AG – $475.9/t FOB Vishakhapatnam. However, consumers may change their strategy by mid-January. Thus, end-users have resumed their activity early this month, which has driven prices for finished product up (+$40/t since early January). Besides, scrap quotations have been following pig iron prices, being only by $25-30/t lower than the latter. In particular, import scrap prices to Taiwan have added $30-35/t by now.

Coke&Coal

In December, buyers signed two contracts with Russian exporters at $419/t C&F and $440/t C&F Goa January and February shipment, respectively. The current prices for coke from Russia are about $440/t C&F
Goa. Chinese material is available at $500-505/t C&F Haldia ($470-480/t C&F in December) in the first half of January, but consumers are in no hurry to accept these levels.

At the moment, Australian high quality coking coal (volatiles – 20.7%, moisture – 9.5%, ash – 9.7%, sulphur 0.6%) is quoted at $290-293/t C&F Chennai, while back in December it was available at $250-258/t C&F. Semi-soft coking coal (ash – 9%, moisture – 10-11%, sulphur – 0.6%, volatiles – 32%) is priced at $215-220/t C&F Chennai now against $185-187/t C&F last month. The above-mentioned prices are just nominal, since there is no available material in the Australian spot market. Coal-mining companies are barely able to fulfill long-term contracts and the situation will hardly improve over the next month. Market participants expect quotations of the material to add another $15-20/t by February.


In these circumstances, Indian importers have switched to the US coking coal market. However, the US material is also quoted quite high, as increased demand from China, Brazil, Europe and local producers has enabled the exporters to implement a substantial increase in prices. Prices for US hard coking coal (ash – 6-7%, moisture – 6-7%, sulphur –0.4-0.5%) have reached $279-282/t C&F Paradip in mid-January, against
$260/t C&F in December. Market participants are sure that prices for coking will add another $5-7/t in January.

Summarization and outlook of key market developments - EU

EU Market

Scrap

The Italian ferrous scrap segment is gradually recovering after holidays and signs of continuation of upward trend which began almost three months ago. As local traders expected, prices are now being set at levels close to the maximums of 2010, when in the last week of December some mills hiked their purchase prices in an attempt to attract additional material. As previously reported, the average price for E40 was EUR 350/t CPT in December. In turn, high-quality bushelings (E8) scrap is quoted at EUR 400/t ($518/t) CPT against EUR 360/t CPT in mid-December. Italian mills are bidding EUR 365-370/t ($472-478/t) CPT for HMS 1&2 (80:20) (E3), EUR 40-45/t up from two weeks ago.Offers of scrap from neighbouring countries are also increasing. In particular, traders from France and Germany have lifted their prices by EUR 40-45/t in two weeks.Suppliers are ready to ship shredded scrap (E40) at EUR 380-385/t ($491-498/t) delivered, bushelings (E8) – at EUR 395/t ($511/t) delivered and HMS 1&2 (80:20) (E3) – at least at EUR 360-365/t ($466-472/t) delivered.

This week Spanish plants have started recovering after a holiday price boom in the world segment of steel scrap. While most European exporters of the material, having already sold most of January production before Christmas, left the market for holidays, US traders together with Turkish mills boosted prices by another $40/t. Meanwhile, market participants report that scrap collectors are ready to sell rather large volumes of OA structural material at EUR 390/t C&F Spain, which means about $504/t C&F at the exchange rate
EUR 1 = $1.295. At the same time, offers of shredded scrap are limited and traders quote it at EUR 395/t ($510/t) C&F, while a week ago it was transacted at EUR 370/t ($493/t) C&F. Estimated prices for HMS 1&2 (80:20) (E3) have also gone up and settled at about EUR 370/t ($478/t) C&F, suppliers say. Currently bids for local scrap are as follows: HMS 1&2 (80:20) (E3) – EUR 360-365/t ($466-472/t) delivered against
EUR 340/t delivered last week. Prices for shredded scrap (E40) have grown to EUR 380-385/t ($479-486) delivered, by EUR 20/t up from last-week levels.

Pig Iron

Market participants report Russian producers are offering February melting at $530-540/t FOB ports of Black and Baltic Sea ($555-565/t C&F). The latest contracts have been reportedly signed at $495-500/t FOB ($520-525/t C&F ports of Spain) for late-January – early-February output. Notably, the current bids are reaching the April peak levels –$565/t C&F. Pig iron of Ukrainian origin is priced at $500/t FOB Black Sea, which means $525/t C&F ports of Italy. Exporters mainly referred to steadily soaring scrap quotations when revised prices. In particular, shredded scrap is available in Italy at $505/t delivered. Taking into account a big price gap between the two kinds of material, pig iron suppliers hope to add $30-40/t to the late-December transaction level. The time when the decrease will be implemented is more important: the Spaniards are getting prepared for February, the Italians are more optimistic, thinking it will be in March. Some traders believe prices will fall by $50-60/t.

Coke&Coal

In the first half of January, despite an increase in coking coal prices in the Polish domestic market, blast furnace coke offers stay stable. Suppliers have not followed coal miners yet but offers are expected to
go up already in February. At the moment, spot prices for high-quality coke (max. 10.5% ash content,
max. 1% moisture) remain at the level of December – EUR 310-320/t EXW (all prices are given exclusive of 22% VAT), which equals to $406-419/t (EUR 1 = $1.31). Quotations of lower-quality coke (max. 11% ash content, max. 7% moisture) are EUR 280-285/t ($367-373/t) EXW. In spite of some upswings of activity, demand in January is almost the same as in December, market players say. Currently, prices for high-quality hard coking coal (ash – 6.5-7%, moisture – 8%, sulphur – 0.5%) from Poland reach $265/t CPT, while the material was booked at $249-255/t CPT in December. Export quotations of semi-soft coking coal (ash – 7-8%, moisture – 9-10%, sulphur – 0.5-0.8%) are at $195-198/t CPT against $180-185/t CPT last month.

Summarization and outlook of key market developments - Turkey

Turkish Market

Scrap

However, in spite of the fact that buyers have ceased purchasing, nominal prices have remained at last-week levels. The stability is largely the result of the policy of US traders, currently enjoying favourable conditions. Firm demand within the country and constantly rising offers of the material ($60/t up w-o-w), as well as persistent demand for scrap from the key foreign buyers, have allowed local scrap collectors to end the month with high prices. For example, estimated prices for US HMS 1&2 (80:20) are at $515-520/t C&F now, unchanged from last week. In turn, shredded scrap is priced at $520-525/t C&F at least. European traders have far less advantage, though they are reluctant to reduce their prices to Turkey, waiting for local
buyers to act. Currently, nominal price for European HMS 1&2 (80:20) is $515/t C&F. Offers of HMS 1&2 (70:30) from a Belgian trading company are the exception – they are coming at $495/t C&F. However, considering quality of the material and the policy of the company that usually sets prices at dumping levels amid uncertain market, this is hardly the beginning of downward trend, traders believe.CIS suppliers of ferrous scrap are in the similar situation now. Only those of them, who were active during holidays, have
sold their material at $510-515/t C&F, while most of traders are negotiating sales at $495-505/t C&F, having just come back to the market in mid-January.


Pig Iron

In the Turkish pig iron market, both import and domestic prices increased at the end of December. Having bought sufficient amounts of the material, consumers are not willing to make big purchases now. Nevertheless, offers keep growing. According to the available information, the latest deals were concluded with Ukrainian exporters at $525/t C&F Marmara, which is $10-15/t above the level recorded in the last week of December. Ukrainian material is currently quoted at $540-545/t C&F. There are also offers from Russian exporters ranging $570-580/t C&F. Now, CIS suppliers, however, have to compete with local traders primarily – with stocks of previously purchased pig iron, they can sell it at prices below import quotations ($520-535/t C&F).

Summarization and outlook of key market developments - CIS Countries

Russian and Ukrainian Market

Scrap

This week Russian and Ukrainian exporters of ferrous scrap have witnessed a decline in business activity in their key sales market. Having left the market for New Year holidays, most of them failed to catch the best moment to sign deals with Turkish buyers. While Russian and Ukrainian exporters, like most their European counterparts, were out of the market for holidays believing that the market will be calm during this period, US exporters successfully implemented a substantial lift ($40/t up) in quotations in Turkey and started 2011 with new prices. Most of Russian exporters are ready to reduce their prices. For example, while last week some suppliers from Rostov-on-Don, who returned to the market earlier than others, managed to sign a number of contracts at $515/t C&F ($484/t FOB excluding freight rate of about $31/t), now deals are made mostly at $500-505/t C&F ($470-475/t FOB). However, even in view of reductions, the current offers are still $30/t above the level of late December and completely cover the scrap collectors’ expenses. In turn, Ukrainian scrap has been changing hands at $500/t C&F at most. After selling most of January offering back in late
December at $450-460/t C&F ($420-430/t FOB), only a number of companies managed to hit the $480/t C&F level ($450/t FOB) by the end of the year. Currently, they have focused on fulfilling the contracts they signed. Nevertheless, the scrap collectors remain optimistic and expect to approach the $500/t C&F ($470/t FOB) mark by the end of January.


Pig Iron

Export prices for February production of pig iron from the CIS are growing. This rise has been caused by increased quotations of finished products and scrap. However, some suppliers keep holding their material off after holidays, waiting for scrap offers to go higher thus prompting a lift in prices for pig iron. Russian material is offered to Europe at $535-545/t FOB ports of Black and Baltic Sea now, $50-65/t up from late December. This level has not yet been supported with deals though, with maximum transaction prices being $530/t FOB for bookings to Central Europe. A small batch of Ukrainian pig iron has been purchased at $520/t FOB ports of Azov Sea ($40-50/t up). However, the estimated price for Ukrainian material is currently $530-535/t FOB ports of the Black Sea. Maximum quotations of January production of pig iron from Russia to Far East have been at $500/t FOB. In mid-January, traders are reportedly ready to supply the material at $535/t FOB. As of now, the suppliers have got no feedback from consumers on that point. However, producers will likely lift prices for their material ($30-35/t up) on growing cost of its substitutes and other raw materials in the Middle East, Metal Expert estimates. However this level will be rather artificially
inflated amid optimistic sentiments and transaction prices will likely approach it by late January only. CIS producers will cite growing production costs of pig iron as another reason for this. For example, the cost of raw materials used by Russian steelmakers in pig iron production will add $55-65/t, reaching $360-500/t in February, in view of rising prices for coal, coke and iron ore as well as due to increasing delivery expenses.