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Moly demand rise to outstrip growth in supply: Loughrey

Keywords: Tags  Climax, Freeport, molybdenum, Kevin Loughrey, Thompson Creek, General Moly, Mount Hope, Thorsten Schier

NEW YORK — Thompson Creek Metals Co. Inc. expects molybdenum demand to rise between 4 and 6 percent annually, outpacing the growth of supply sources through 2020, according to chairman and chief executive officer Kevin Loughrey.

"(Freeport-McMoRan Copper & Gold Inc.’s) Climax is the only primary molybdenum mine to come on in the near term, as rising capital costs and permitting delays hinder other projects," he said during the Denver-based company’s first-quarter earnings call.

Climax is expected to start operations this year and ramp up to production of 20 million pounds by 2013. The mine can produce more than 30 million pounds, but Freeport, which is already a significant molybdenum producer, has said it will tailor production levels to market conditions (AMM, Oct. 21).

"I haven’t seen any material from Climax in the market," one trader said, suggesting a slow ramp-up at the mine.

The other major primary mine in development, General Moly Inc.’s 40-million-pound-per-year Mount Hope project in Nevada, has faced permitting delays (AMM, May 3), with the earliest possible start-up now in the second quarter of 2014.

Global supplies have also been constrained.

"Chinese net exports continue to play less of a role in the moly(bdenum) trade," Loughrey said, adding that new South American copper mines, most of which will produce molybdenum as a by-product, are also coming on-stream more slowly than expected.

"(KGHM Polska Miedz SA’s) Sierra Gorda is expected to come on in 2015," he said, after some estimates cited by AMM sister publication Metal Bulletin that the mine could be operational by 2014.

Loughrey pointed to growing demand from emerging economies such as China and India, as well as rising steel production rates in the domestic markets as positive indicators for consumption.

"Steel production rates in the U.S. are strengthening, and we believe they will continue to do so in the near term," he said.

In recent weeks, capacity utilization in the domestic steel industry climbed more than 80 percent for the first time since October 2008.

This bullish view on fundamentals hasn’t yet affected prices, however. Molybic oxide is trading between $14.10 and $14.30 per pound, down from $17 to $17.50 per pound at the same time last year.

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