Molybdenum prices are on the ropes

Forecasters see huge 57% drop benefiting buyers

By Tom Stundza -- Purchasing, 1/21/2009 1:51:00 PM

Investment bank Dahlman Rose & Co. in New York expects molybdenum to average $12/lb this year and $15 in 2010. (Purchasingdata.com’s forecast is similar, $13 in 2009 and $15 in 2010, because of the slowdown in North American steel production). In 2008, the steel-smelting additive cost an average $29/lb after peaking at $30 in 2007. On a monthly basis, however, molybdenum has sold for less than $10/lb for two months now.

This huge 57% decline in prices led producers Thompson Creek Metals of Toronto, Freeport-McMoRan Copper & Gold of Phoenix, and Creston Moly of Vancouver, British Columbia, to either reduce output or shelve expansion plans. Investor Eric Sprott who runs Sprott Asset Management recently shut his Sprott Molybdenum Participation investment fund, citing “the unfavorable outlook for the price of molybdenum” and reduced demand that has sliced the production and sale of molybdenum.

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