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Thompson Creek sees status quo in ’13

Keywords: Tags  Kevin Loughrey, Thompson Creek, molybdenum, third quarter 2012, Thorsten Schier


NEW YORK — The molybdenum market looks poised to follow a familiar pattern in 2013, with restocking early in the year leading to improved demand and a subsequent falloff toward year-end.

“That’s a little something of a pattern that’s developed here over the past years. That’s not historically always been the pattern, but it seems to be one right now,” Kevin Loughrey, chairman and chief executive officer of Denver-based molybdenum producer Thompson Creek Metals Co. Inc., told AMM.

Loughrey—who announced his plans to retire within the next 18 months (see related story, below)—said he expects some improvement in Chinese demand and a “modest” improvement in the United States next year, while Western Europe still remains a question mark.

“You scratch your head and wonder in Western Europe. Buyers there are buying cautiously, if at all,” he said.

There will likely be more contract business done for 2013 as sellers are eager to lock in volumes due to the relatively thin spot market in 2012.

“They’ll be anxious to sell on contract,” Loughrey said.

Consumers might restock mainly under formula-based contracts when purchasing resumes early next year, which could leave spot prices at low levels, Loughrey said.

The company reported a net loss of $48.3 million in its third-quarter 2012, down from net income of $45.6 million in the year-ago period. Revenues in the three months ended Sept. 30 were $74.9 million, compared with $154.8 million in the year-prior quarter, primarily due to a weakening molybdenum market and a $47-million impairment charge.

“The moly market continues to be relatively weak due to the weak performance of some of the subsets of the economy to whom we sell,” Loughrey said during the company’s third-quarter earnings call.

Molybdenum production stood at 6.1 million pounds during the quarter, almost double the 3.7 million pounds achieved a year ago, as the company mined higher ore grades at its Thompson Creek Mine in Colorado.

However, the company sold only 3.3 million pounds of its production due to the soft markets.

“We intended to ramp those sales up in the second half (due to expected higher production). That’s been a little more difficult to do,” Loughrey said during the call.

Cash costs for the quarter were $9.46 per pound, compared with $15.62 per pound a year ago, the result of a recent cost-saving decision to cease stripping activities at the Thompson Creek Mine (amm.com, Oct. 3).

The company’s average molybdenum sales price was $12.85 per pound, 17.8 percent lower than in the same period a year ago.

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