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G. Chandrashekhar

Mumbai, July 14 The market for molybdenum, the hard grey metallic element used to toughen ally steels, is set to face supply deficits in 2009 and 2010 because of delays in bringing new projects online.

Together with robust expansion in demand, especially in the energy industry and narrow inventory levels, rising production costs and supply uncertainties are poised to push prices higher, according to 2008 Molybdenum Update of New York-based CPM Group.

The upward revision in the expected prices for molybdenum is partially supported by climbing capital expenditure, sharp increase in diesel prices, higher electricity prices in China and loftier freight costs, the report pointed out, adding that the expectations that supplies will not exceed demand on a sustained basis are expected to boost the floor prices of the metal.

Tightness in the credit markets and other developments have caused molybdenum’s forward supply curve to shift over the past year. Project financing has become an uphill battle for some of the new primary and by-product producers. Over the next two years, the deficits are expected to be larger than anticipated earlier. However, there will be slightly large surpluses from 2011 through 2014 when several large primary producers ramp up production towards full capacity. Demand for molybdenum has been rising for last five years.

Molybdenum-bearing stainless steels are used in applications where the performance of the steel surmounts the cost, the report remarked. Molybdenum alloys are resistant to extremely high temperatures as the metal has one of the highest melting points of all elements and very low thermal expansion co efficient. Prices have stayed in narrow range of $ 35.00-33.50 a pound for last one year and below $ 34/lb since April 2008.

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