Sprott''s a GeniusChinese moly oxide rises to $32-34/lb FOB on steady demand
Singapore (Platts)--24May2007
Chinese molybdenum oxide price appeared to have firmed up to $32-34/lb
FOB China this week, up from $31-32/lb the previous week, industry sources in
Chan said.
Sources generally attributed the rise to the steady demand and tight
supply and not due to the central government's announcement of increase in
export tax for 142 items, including molybdenum oxide, effective Jun 1, 2007.
The export tax for moly oxide will be raised to 15% from the current 10%.
"The announcement of the export tax hike earlier this week was not
unexpected as there have been talks of it for a long while. The market has
been quiet and calm and the impact has most been digested," one trader said.
One Chinese analyst said some buyers have been buying in advance due to
the previous unconfirmed talks of the hike. As a result, the moly oxide prices
have been rising steadily. "Some companies were busy, trying to export as much
as possible while some buyers were also trying to stock up now," he added.
Another trader said spot material, however, is extremely limited. "The
announcement came this week and will take effect in less than two weeks. There
is really not much time for taking extra order from now till to June 1 as most
suppliers are still trying to fulfill previous contracts and they also do not
have any spot material on hand to sell either," he said.
The analyst concurred, adding that the chance of getting any spot
material is extremely slim. "If there in any, it would be a very small
quantity," he said.
With the higher export tax, sources generally agreed that export volume
will fall in the near future. "Higher price is unavoidable as the extra export
tax has to be passed onto buyers. They may find it too costly and may want to
buy in smaller quantity, while observing the market and the Chinese policy,"
the second trader said.
Sources agreed that the market will need time to adjust to the new export
tax effective June 1. "There is really nothing much we can do except to
wait-and-see," the first trader said.
Meanwhile, Chinese ferromolybdenum prices were also heard higher at
$75-76/kg FOB China this week, up from $74-75/kg, on the back of steady demand
and tight supply.
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