TRUTH / Moly DemandAs far as current events affecting a mining jr. today , there little correlation , so to project that this co. will do well because of nuclear meltdown is patently ABSURD if not of extremely POOR character .
Here's the truth of the matter ,
Future reactor construction may be curtailed , with LESS moly demand !!! And certainly the repair of those damaged units or any new immediate construction will have NOTHING to do with a junior that is trying to get a drill permit !
Molybdenum Demand and the Rebuilding of Japan
By Michael Montgomery—Exclusive to Moly investing News
The molybdenum market, as with almost all other commoditiesmarkets, has been affected by the recent crisis in Japan and the ongoingviolence in the Middle East. While these events, and the the impact onthe markets have been covered ad nauseam since the earthquake, mostreports concern the negative affects on the price of many base metals.On the LME, the price for moly has fluctuated since the quake; currentlythe cash buyer price sits at $35,850per tonne. However, with molybdenum the earthquake and subsequenttsunami in Japan may be beneficial to moly demand and consequentiallypositive for the price of the metal, as well as for manganese, and vanadiumas these metals are mostly used in steel alloys. The added demand willcome from the increase in steel production needed to rebuildinfrastructure, retrofit dilated infrastructure, and replace thousandsof cars lost to the raging waters.
This new demand is needed for the molybdenum market, which has asurplus in 2011 as high steel demand in China, and the rebound in priceof moly since the economic collapse has seen a rapid increase in mineproduction. Most projections show steel production in China growing lessthan in the past few years, which experience annual growth at around 15percent. Projections for 2011 range from 5-10 percent. The earthquakein Japan is adding new demand for high strength steel as the countrylooks to rebuild with stronger infrastructure.
The added demand is not only from rebuilding what the earthquakedestroyed, but also building everything bigger, stronger and moretolerant to the massive forces of future quakes and tsunamis. SouthKorean steel maker POSCOhas stated that it projects an extra steel demand of 1.5 million metrictons from Japan this year as the earthquake-hit country needs moresteel products to reconstruct damaged infrastructure. High strengthsteel alloys on average contain 8 percent molybdenum, the added 1.5million tonnes of steel equates to 264,480 pounds of added molybdenumdemand.
The downside to the molybdenum equation due to the events last monthrevolves around the energy sector. High oil prices may lead to a drop inautomobile sales, which would dampen steel production. The war inLibya, protests in Syria, Bahrain, Saudi Arabia and Iraq are fuelingspeculation in the oil market, and may only get worse unless somesemblance of order returns to the region.
The nuclear meltdown may weigh on the future of planned nuclear powerplants around the world. Each plant requires approximately 400,000pounds of molybdenum for high heat steel applications. The role thatmolybdenum plays in nuclear power plants was covered on Moly Investing Newsin April, 2010. In China alone there are 25 plants under construction.Although there is growing opposition to the plants, they will likely bepushed through. The Chinese simply need the added electrical capacity,and there are few options in the short term to replace the generationcapacity of 25 nuclear power plants.
In the United States there is one nuclear plant under constructionand 30 more proposed plants, most of which will be viewed unfavorably inlight of the Japanese meltdown. Existing power plants may upgrade thesystems already in place, which might take up some of the slack.
All things considered, Japan will need massive amounts of steel torebuild what the tsunami washed away. Infrastructure and new automobileswill pave the way for steel demand in the country. While the events inJapan are horrific and depressing, and may affect global markets forquite some time, the need for steel may use up a large portion of thesurplus that is currently holding down the price of moly.