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After starting the year averaging $15/lb through February, molybdenum market prices have increased to $16-$17, which analysts say has been caused by improving demand from steelmakers in most geographies.
Moly is used principally as an alloying agent in steel, cast iron, and superalloys to enhance hardenability, strength, toughness and wear and corrosion resistance. Last year, with steelmaking depressed, moly oxide averaged $11/lb in North America. Analyst Mike Gambardella of J.P. Morgan Securities says the expected $19 annual average price for 2010 won't match the $29 of 2008 mostly because demand from several late-cycle end markets (such as oil country tubular goods) has only started to improve-and Europe (the geographic market that has lagged the most to date) also has just started to show some signs of life.
However, with the J.P. Morgan global industrial production growth forecast of 7% this year and 6% in 2011, Gambardella thinks steelmaking and other end-use markets will use enough moly to keep supply tight through 2011 and bring next year's average price up to $23.
There is no new supply coming into the global market until at least 2011. So, the analyst thinks it would take a significant decrease in global demand for moly-driven by lower demand from the stainless steel, specialty steel or the petrochemical industries-to depress 2010 moly prices.