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World molybdenum output will grow around 2% on the year in 2007 to an estimated 189,009 metric tons, with prices averaging around $20.00 a pound, Chile's state copper commission Cochilco said Tuesday.
Chile is the world's second-largest producer of the metal, used in specialty steel alloys, and is often found as a by-product of copper.
Although the expected 2007 average price is below the record $31.70 per pound averaged in 2005, it's still well above the $2.00-$5.00 range it's traded at since the 1970s, said Cochilco's new head of studies, Ana Isabel Zuniga.
"The current price situation is still well above historical prices," Zuniga told reporters.
In 2005, several local copper producers, including state copper giant Corporacion Nacional del Cobre, or Codelco, modified their copper mining plans to extract more molybdenum. That year, Chile produced an unprecedented 48,041 tons.
This year, Chilean production will fall to an estimated 38,000 tons, with Codelco producing the lion's share. Other local copper miners that produce molybdenum as a by-product include Antofagasta PLC's (ANTO.LN) Los Pelambres, Anglo American PLC's (AAUK) Los Bronces and Xstrata (XTA.LN) and Anglo's Collahuasi.
Demand for molybdenum-hardened steel will hold fairly well this year, in part due to heavy demand for steel tubing in the oil and gas industry, Zuniga said.
Additionally, "China will continue to play a very important role in the demand for molybdenum and metals in general," the analyst said.
Chile's molybdenum exports, meanwhile, likely will fall to $2.0 billion in 2007, from $3.0 billion the previous year, according to Cochilco.