China molybdenum feast not over yet-expert
By Pav Jordan
VINA DEL MAR, Chile, Sept 12 (Reuters) - China's ravenous consumption of industrial metals in the lead-up to the Beijing Olympics may have seen demand growth peak in some metals, but the show is not over yet for molybdenum, an industry expert told Reuters this week.Molybdenum, the metal used to add strength and shine to specialty steels, is one of the few industrial metals that has resisted a general commodities price retreat in recent months, and demand for specialty steels in China will support prices through 2010 at least.
Hardy Mohrbacher, a metallurgical engineer, steel expert and consultant to the global steel business, said on the sidelines of an annual gathering of the global molybdenum industry in Vina del Mar that China is virtually locked-in to a host of giant projects that will need steels with molybdenum content.
"There's no way around it," said Mohrbacher, who holds a professorship at Peking University in Beijing. "What is driving China are these big infrastructure projects, and they have to be done in order to keep general industrialization of China sustainable. These large scale projects need high quality steels."
According to an article on the website of the International Iron and Steel Institute (www.worldsteel.org), at least 3 million tonnes of steel was used to build the stadiums, Olympic village and public transport projects in Beijing in the lead up to the games.The Bird's Nest Stadium - made famous in likely the most stunning Olympic opening ceremonies yet - is made of 45,000 tonnes of steel plate.
"The Olympics are just one example, but there are a lot of projects still coming up," said Mohrbacher, pointing at major, continued demand in China for more value-added steels."Strength demand of construction steel is further increasing... Corrosion resistance and buckling strength are demanded in the oil and gas industry," he said.
Mohrbacher estimates China steel demand at between 540 million and 580 million tonnes in 2010, with more and more of that demanding molybdenum to give it attributes of strength, hardenability, weldability, toughness, elevated temperature strength, and corrosion resistance.
The oil and gas industry alone will lay 1,400 kilometers (870 miles) of submarine pipeline by 2010. After 2010, China is seen extending its railway by 17,000 kilometers.
THE MILITARY QUESTION
"I don't think that you can stop that that easily anymore," said Mohrbacher. "This just has to happen. There is so much momentum in this development that it just will go on." He said molybdenum consumption could rise from about 14,298 tonnes in 2007 to at least 16,307 tonnes in 2010, according to conservative estimates. On the outside, he saw China's moly consumption at 22,266 tonnes annually in two years' time.
China has since the middle of the last century set out its development plans in five-year slots, making it easier to quantify official projects like the building of major pipelines or throughways.China is currently in its 11th five-year development plan, which ends in 2010.But due to the massive state apparatus, the big question mark for much of China's metals consumption has been military defense spending, where potential molybdenum demand is huge.
"The major unknown is what goes into defense and defense-related projects as the Chinese build a fleet, submarines and so on," he said.
(Reporting by Pav Jordan; Editing by Marguerita Choy)