Molybdenum ShortageChina Molybdenum Says Shortage to Support Prices
www.bloomberg.com
China Molybdenum SaysShortage to Support Prices (Update1)
By Helen Yuan
Aug. 27 (Bloomberg) -- China MolybdenumCo., the nation's second-biggest producer of the metal used insteel making,expects a global shortage of 2,000 metric tons this year will preventprices from falling.
Production may decline in Chile and China, ensuring that a deficit will last for ``quite a while,'' General Manager WuWenjun said today at a conference in Hong Kong. Wu in April forecast a deficit will last until 2010.
The estimated shortage, about 2 percent of global output inthe first half,may bolster molybdenum prices that have already jumped fivefold in the past fiveyears as demand for oil steelpipes surges. China may raise demand of the metalby 24 percentthis year, larger rival Jinduicheng Molybdenum Co. said in June.
``The domestic market will maintain rapid growth in the second half,'' Wusaid.
Molybdenum prices have gained 4.7 percent this year to$33.75 a pound,according to Metal Bulletin.
Shares of China Molybdenumgained 5.7 percent, the biggest increase since July 9, to close at HK$5.05 inHong Kong. China Molybdenum's shares have fallen 65 percent this year,comparedwith a 23 percent decline in the benchmark Hang Seng Index.
The Luoyang-based company this week posted a 13 percent gain infirst-half profit.
Domestic Sales
China Molybdenum plans to raise domestic sales as export tariffs reduceearnings from overseas, Wu said. Chinese stainless steelmakers may add productionin the second half, hesaid. China Molybdenum also will increase sales to theheavy machine and military industries.
China's stainless-steel producers, led by ShanxiTaigangStainless Steel Co. and Baoshan Iron &Steel Co., only produced 2.51 million tons of the rust-proof alloy in thefirst half,compared with 6.67 million tons for the whole of 2007.
China Molybdenum gets 77 percent of its domestic sales fromTaigang, Baoshan,Zhangjiagang Posco Co. and Wuhan Iron & SteelCo., Wu said.
The company's production of molybdenum concentrate rose 17percent to 16,753.7 tons in the first half from a year ago, andmolybdenum oxides gained 28 percentto 13,021.8 tons, thecompany said in its interim report on Aug. 24.
It plans to make 17,000 tons of the concentrates and 12,000 tons of molybdenumoxides in the second half, Wu said.