The market has been very focused, maybe the word is mesmerized, by the fall in base metal and steel prices over the last couple of months to the point where we thought it would be interesting to see if the minor metals which form such an important element of the specialty steels market have been affected in the same way.
Today we take a look at Molybdenum, wonder additive to iron in the manufacture of heat resistant, wear resistant and high strength steel alloys. 75% is used in alloys with iron, particularly stainless steels where the combination with chrome can mean such grades do not need nickel. These ferritic and martensitic grades have been growing in popularity as the higher nickel content austenitic grades have been waning due to the high nickel price. However all stainless sales have been suffering this year and finally molybdenum consumption has fallen as a result.
Prices have come off from a high of nearly $40/lb in 2005 to $30/lb in October this year to $12/lb this week, prompting production cutbacks and deferment of new projects. Freeport-McMoRan Copper & Gold Inc, announced this week they would cut production by 25% at their largest Henderson mine, plus defer the new Climax mine, both in Colorado, and look to cut back production at mines where Moly is a by-product of copper production.
After years in balance, the market was forecast to go into surplus in 2010 as new mines came on stream and roasting capacity was upgraded. With the drop in demand even these closures may not be sufficient to support the price over the next couple of years and current price levels look like they are here to stay. This will further undermine the stainless market price as raw material costs for iron, nickel, chrome and molybdenum continue to fall allowing producers to respond to falling demand with ever lower prices. Welcome news for embattled stainless consumers facing an uncertain market for their own products.