RE: Positive news for moly prices..............Molybdenum Rule Changes In China
By Michael Montgomery—Exclusive to Moly Investing News
The latest incarnation of China’s ‘Five Year Plan’ may affectthe long run outlook for a basket of base metals. In an effort toreduce the amount of energy needed to refine metals (as well as thesubsequent pollution) the country has capped the growth of 10 metals at 8percent per year. Included in this group of metals is molybdenum,capping production in 2011 at 200,000 tonnes, up from 185,000 tonnes in2010. This new policy falls in line with statements from Chineseofficials classifying molybdenum as a strategic material, saying itwould restrict the mining and export of the metal starting in 2011, andmay even build a stockpile of the metal.
This change may also mean that China, the world’s largest steelmanufacturer, may have to increase imports of molybdenum, essential tohigh strength steel. This steel will be needed for large scaleinfrastructure projects as well as automotive production. “The big HolyGrail for molybdenum is the lightweight steels they’ll be using in carsin the coming decade,” said Justin Lennon,a base-metals analyst at Mitsui Bussan Commodities. While high oilprices have put a dent in the forecast for automobile sales worldwide,in China the growth of the automobile market is still expected to climb by approximately 15 percent this year.
In 2010, automobile sales in China gained 32 percent, to just over 18million units. The elimination of government subsidies and tax breaksfor new vehicle purchases may be behind the slow down in automobilesales. However, some analysts forecast 40 million units by 2020. Theincrease in sales from China alone means nothing but positives for themolybdenum market.
In relation to automotive demand, the reduction in output fromJapanese automakers in the wake of the disaster is holding downforecasts for moly demand in the country. Many of the plants are stilloperating well below average. Toyota alone may lose production of300,000 vehicles in Japan and 100,000 units of overseas auto production through the end of April.
While the loss of moly demand tied to the lack of auto productionfrom Japan is substantial, it will be offset slightly by the productionof power plants from Tokyo Electric Power Company (Tepco). The companyplans to construct 109 thermal plants.
“Japanese steelmakers through several trading houses have ordered atleast four container loads of moly oxide from the spot market in thelast two weeks. Among the four identified, one container-load isbelieved to be related to the Tepco demand,” stated Mayumi Watanabe, for Platts.
The added demand for steel from not only the construction of thesepower plants, but for the rebuilding of other structures lost to theearthquake and tsunami should offset lost steel and moly demand fromreduced automotive demand.
New Molybdenum Markets
The molybdenum as a substitute for platinumas a catalyst in the production of hydrogen is picking up momentum. Thefirst use of moly in hydrogen production discovered at U.C. Berkeleywas reported on Moly Investing News in May, 2010. This latest discovery is from researchers at Ecole Polytechnique Fédérale de Lausanne (EPFL) in Switzerland.
“Producing hydrogen in a sustainable way is a challenge andproduction cost is too high. A team led by EPFL Professor Xile Hu hasdiscovered that a molybdenum based catalyst allows hydrogen productionat room temperature, and is inexpensive and efficient,” reported Nicolas Guerin.
The discovery could pave the way for economically viable hydrogenpower. While these technologies are still a way off from widespreadcommercial use, the use of molybdenum in nano-technology and hydrogen power could pave the way not only for a robust new market, but for a smarter and greener planet.