June 06, 2002 09:17 AM ET Email this article Printer friendly version
[maybe Ross Perot has something to do with it or those bell bottoms evoking the '70's]
By Andy Blamey
LONDON, June 6 (Reuters) - Molybdenum again took centre stage in European minor metals trading this week as the market's breakneck rally showed little sign of flagging, pushing prices to levels last seen over seven years ago.
Traders said a welter of production cuts and curtailments at major copper producers in North and South America and reduced Chinese exports have had a serious impact on molybdenum, leading to a scramble for scarce supplies.
By-product molybdenum accounts for around 60 to 70 percent of total output.
"There are just no concentrates around -- it is a real shortage here," one UK trader said.
Molybdenum oxide MLY-OXIDE-LON , which is used mainly as an alloying additive in steel production to enhance strength and corrosion resistance, was offered at around $8.00-9.00 a lb on Thursday, the highest since April 1995.
Oxide values have risen some $3.00 from late last week, having been as low as $2.25 a lb in late 2001.
Western-origin ferro-molybdenum MLY-FERRO-LON was also around the highest since April 1995 at $18.00-19.00 a kg.
Some consumers have been caught out by the speed of the price rise and are having to pay inflated spot market prices.
"There are two groups. Those with stocks are unlikely to accept $19-$20 a kg, but those with no stocks -- usually the smaller companies -- have no other option," said one.
"They've been used to buying on a hand-to-mouth basis for the last two years, with delivery times of a week at most, so they have no time to negotiate better deals."
Western output has been hit by both reduced production from primary mines and less by-product availability from copper miners, who reduced output late last year in the face of a weak copper market.
There was a spate of production cuts in 2001 by major copper producers, which was followed by a period when there were no major output curbs.
Over the last week, however, BHP/Billiton BLT.L has cut output by 80,000 tonnes at its majority owned Escondida copper mine in Chile.
Grupo Mexico GMEXICOB.MX has said it will shut operations at its Cananea copper unit, cutting 150,000 tonnes in annual output, while a power blackout caused by an intense snowstorm in Chile halted copper production at the Los Bronces mine, owned by a unit of Exxon Mobil Corp. XOM.N .
Future availability of by-product moly would depend on copper market developments, while increased output of primary material was unlikely in the near term despite the sharp increase in prices, traders said.
"If a primary miner decided this month to raise output, material wouldn't hit the market until the fourth quarter," one trader said, adding that increasing production would require significant prepraration work.
"They'd need to strip overburden and carry out exploration drilling -- these are expensive and they don't tend to get done when the market's at $2.50 a pound."
COBALT FLAT, AWAITS DLA SALE
Cobalt prices were flat this week, with all grades from 99.3-99.8 percent indicated in a fairly narrow range.
"The market is going sideways at the moment -- I'd say $8.00-8.30 would cover all of the grades, said one trader.
Australian producer WMC Ltd reported no fresh sales on its website, www.wmc-cobalt.com, this week and as of Thursday was offering high-grade material at $8.10 a lb.
Market attention was expected to focus on next week's sale of stockpile metal by the U.S. Defense Logistics Agency. The sale, scheduled for June 11, will be the first under the DLA's new Internet-based sales system.
The new system has been criticised for reducing market transparency, as DLA will no longer detail the full range of bids and the awards made within a day or two of the bid opening.
"All they'll probably do is in July say who they've sold to and the approximate price for sales over the month. You'll only know the winners and not the full range of the bids," the trader said.
(Additional reporting by Martin Hayes)
Mining News Fri, 07 Jun 2002, 1:39pm EST Copper Rises to One-Year High After LME Inventories Decline By Stuart Wallace
London, June 6 (Bloomberg) -- Copper rose to its highest price in a year after inventories of the metal monitored by the London Metal Exchange, the world's largest metals bourse, posted their biggest decline in more than four years.
Stockpiles of the metal fell by 21,625 tons, or 2.3 percent, to 936,400 tons, their lowest level since March 22 and the biggest one-day drop since April 1998, the LME reported. Copper for delivery in three months rose as much as $10, or 0.6 percent, to $1,707 a ton on the LME, the highest price since May 29, 2001.