Cobalt, molybdenum seen on different paths as LME contracts near

Molybdenum and cobalt will soon emerge as the London Metal Exchange's first minor metal contracts, but that could stand as the only similarity shared by the two materials in upcoming years.

The global molybdenum and cobalt markets will face very different fundamental situations?and therefore, pricing environments?in the mid- to long term, according to analysts of the minor metals.

Molybdenum boasts the most favorable of the two outlooks, according to Catherine Virga, senior base metals analyst at CPM Group in New York.

Although molybdenum has faced its own set of challenges at the hands of the past year's global financial meltdown, specifically the weakening of the steel market, a number of persisting structural trends have helped keep the molybdenum market afloat, she said.

"With the steel market consuming roughly 70 percent of the molybdenum supply, it's really not much of a surprise that the molybdenum market is facing some of the cyclical problems that the steel market has been having in this downturn," Virga said this week at the LME's Minor Metal Breakfast Seminar in London.

Nonetheless, "there have been rather bullish structural trends for the past couple of years (for molybdenum). These structural trends have not been impeded by the recession and they continue to play out," she said pointing to recent and impending infrastructure builds throughout Organization for Economic Cooperation and Development (OECD) nations and the urbanization and industrialization of emerging economies.

"China's seeing a tremendous surge in demand for molybdenum and steel," Virga said, noting that some 120 million tonnes of steel are forecast to be consumed worldwide during the next two years due to the various fiscal stimulus packages.

The supply side of the molybdenum equation is also strong. China, once a net exporter of the minor metal, has become a net importer partially due to a number of "significant" mine closures, she said.

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Additionally, many of the new copper deposits slated to come on-stream in the near-future are located in Africa, where cobalt?not molybdenum?is the prime byproduct.

"We're not going to have the same amount of supplies coming from byproduct production," Virga said, noting than some 60 percent of total molybdenum output today comes from copper-molybdenum mineralizations. As a result, the molybdenum market, which could face "a very narrow surplus" this year and in 2010, will move back into deficit by 2011, she added.

With demand on the rise and supply on the decline, the molybdenum market is slated for the upside. According to CPM's estimates, molybdenum will average $11.70 per pound in 2009 and $17.50 in 2010. In today's environment, canned molybdic oxide is in the $13.75- to $14-per-pound range, after having grazed April lows of $8.30 per pound.

While the forecast for molybdenum is sunny, cobalt could still have some stormy days ahead, according to Eric Taarland, senior consultant at CRU International Ltd.

Cobalt, at one time a strong minor metal in terms of price, is facing weakening fundamentals going forward as a growing number of mining operations are brought on-stream throughout Africa, specifically the Democratic Republic of Congo. Freeport-McMoRan Copper & Gold Inc.'s majority-owned Tenke Fungurume project alone, which began production this year, is initially expected to produce some 18 million pounds of cobalt annually.

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"As more supply comes on-stream, we expect (pricing) deterioration," Taarland said at the LME breakfast.

Cobalt demand is also on the decline, he said. Although the minor metal, which is primarily used in superalloys and batteries, will see a brief uptick as electric cars evolve, other uses of the minor metal are quickly "maturing," he added.

"We do not expect growth to continue at these same levels as the last decade," Taarland said, noting that CRU estimates a 2009 average price of $20 per pound for low-grade (99.3-percent) cobalt and a long-term price of $10 per pound.

Low-grade cobalt is currently in the $14.5- to $15.6-per-pound range, up from first-quarter lows of $9 but a far cry from the nearly $50-per-pound level seen in March 2008.

Yet despite the expected market divergence between cobalt and molybdenum in future years, the LME expects both contracts to thrive on their new trading platform, Martin Abbott, LME's chief executive officer, said. "These are two markets that have been historically extremely volatile and extremely difficult to price," he said, noting that both are "perfect" for LME contracts.

The exchange's new molybdic oxide and cobalt futures contracts will start trading on Feb. 22.

Moly oxide prices will be higher next year, Molymet’s Graell

The average molybdic oxide price in 2010 will be higher than in 2009, John Graell, ceo of Chile's molybdenum converter Molymet, told MB.

"I wouldn't risk estimating a price, but the 2010 average will be higher than 2009's, although I don't think the difference will be greatly significant," Graell said, responding to the recent forecast of an average price of $17.50 per lb in 2010 by Catherine Virga, senior base metals analyst at CPM Group (MB Oct 14).

Meanwhile, Graell still expects an average of around $11 per lb for the whole of 2009, a figure he forecast in June (MB Jun 8).

At that time, prices were around $9.80-10.50 per lb and recovering from levels as low as $7.70-8.30 per lb in mid-April. But Graell had warned that "highs and lows" could still affect the market.

His words proved prescient, as prices rose to $18.30-18.70 per lb by mid-August before dropping again, trading at $13-13.50 per lb in the last two weeks.

"I think volatility will accentuate in the long term, and not only in the molybdenum market but in other metals markets and in the industry in general," he said, adding that companies will have to prepare for this new scenario.

Still higher prices in the second half are driving Molymet's utilisation rate upwards.

During the first half, the company worked at around 80% of its installed capacity of roughly 150 million lb per year and, in the second half, the level will reach 90% on average, Graell said.
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At the start of January, the company will start-up its new roaster furnace in Mejillones, Chile, which will be able to produce 33 million lb per year.

"By the end of the first quarter we already plan to reach full output there," he said.

Molymet also plans to build another furnace in Mejillones, which would take total capacity to 67 million lb per year.

The company recently submitted a request to Chile's environmental authorities to construct the furnace and is now waiting for the permits to continue its studies.

In China, the company has been granted environmental approval to build a molybdenum processing plant in Inner Mongolia, which could be commissioned by the end of 2012 and have a capacity of around 18 million lb per year.

The plant would represent Molymet's debut in the Chinese market.

"We are now finalising technical studies in order to take them to our board in the first half of next year," Graell said.

Antimony ingots,antimony trioxide prices soar in China on Hunan supply concerns

Shanghai 23 October 2009 08:30 Published by samjiefu@gmail.com

China's domestic antimony prices are being driven up by rumours that Hunan province will force antimony miners to consolidate in the wake of the Hsikwangshan Twinkling Star accident in early October.

Grade II antimony in the Chinese free market was quoted at 42,000-43,700 yuan ($6,151-6,400) per tonne this week.

"The prices are going up these days, and most of the offers have settled above 43,000 yuan per tonne," said an analyst at Minmetals in Beijing.

Hunan's provincial government may try to restructure antimony mining in the area by reducing the number of companies in operation from 80 to just six through mergers and shutdowns of smaller producers, sources said.

Twenty-six miners died earlier this month when their transport cage plunged down a mineshaft, an accident that once again highlighted dangerous conditions in China's mining sector.

The provincial government wants fewer and bigger companies to ensure mine safety can be monitored more effectively, source said. 

"Once the government meddles with the accident [investigations], the nearby smaller miners may be asked to shut down for safety reasons," said an analyst from a Securities Company in Shanghai.

Market participants did not know when Twinkling Star would resume production, and the company could not be contacted.

"Definitely, the accident will cause output losses for Twinkling Star, but what's worse, it will spread supply concerns all over Hunan province and the country as a whole," he added.

Hsikwangshan is a subsidiary of Hunan Nonferrous and is also the top antimony producer in the world.

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"We have no idea when the mine will resume operation in Hsikwangshan Twinkling Star, but it will for sure take some time," said a Chinese trader, adding that prices would likely rise further.
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"Antimony prices were already in line with other non-ferrous metals and the strong performance of gold, which began to surge even before October," she said.

Cobalt prices jump higher as enquiries turn into business

21 October 2009 12:53  Published by samjiefu@gmail.com

Cobalt prices moved up again on Wednesday as traders and producers were able to turn some of the new enquiries they are fielding into business.

Low-grade cobalt rose to change hands at $16-17 per lb from $15.40-16 last week, while high-grade climbed to $17-18.50 from $16.50-17.50.

"Volumes last week began going up," one trader, who sold Russian material at $16.80 per lb, said.

"There has been a 10-20% uplift in prices, initially inspired by traders on the back of speculative Chinese enquiries," he added.

But he preached caution. Despite having sold high-grade metal at $18.80 per lb on a delivered works basis in China, he said: "It's all going on in the $16-18 range, but at the top end it's all very quiet."

A second trading source said that the move up in prices last week caught some consumers out.

"It's a classic situation. There is pent-up demand from consumers, but they always miss the boat. They wait for the market to bottom, but by the time it has, it's too late," he said.

There are many hundreds of tonnes of enquiries for metal in the market to cover the end of this year and 2010, he said.

"The reality is there's not much metal out there and the chemicals and battery sectors are going well," he said, predicting that prices will trade in an $18-20 range in November.

A producer source agreed. "Batteries are doing pretty well in Japan and Korea," he said. "But it's all really a question of supply."

To illustrate the problems traders and consumers face in obtaining material, many pointed to Kasese's continuing absence from the market; the fact that Chambishi has not yet restarted; BHP Billiton's withdrawal from the spot market; and to reports from other market participants that Sherritt is sold out of spot material till December.

But one consumer source was sceptical about what is driving the higher prices.

"The market still seems to be moving up but, to my feeling, for the wrong reasons," he told MB. "Demand for end products remains significantly depressed."

The bearish factor of overall supply rising on higher production from sources such as Freeport McMoRan's Tenke Fungurume mine in the Democratic Republic of Congo is also being ignored.

Antimony ingots,antimony trioxide stable in tight global market

London 21 October 2009 14:49

Antimony prices were stable on Wednesday as European consumers and traders mostly stayed out of the tight market.

Trioxide-grade antimony is trading at $6,275-6,475 per tonne and standard-grade II antimony is trading at $6,250-6,450 per tonne.

Little business was reported on Wednesday, with traders and consumers both reluctant to accept Chinese offers as high as $6,700 per tonne.

"In Europe, the prices are too high and people don't want to buy anything. At these levels, I think they are boycotting the market," one Chinese trader said.

"I don't have any transactions to report, they are not accepting offers even above $6,400 – I think they will only accept $6,350 or below," he said.

The only businesses reported on Wednesday were for small tonnages booked at the top end of the MB ranges.

Prices have soared since the fatal accident and subsequent suspension of mining activity at Hsikwangshan Twinkling Star, the world's largest antimony producer, on October 8.

Mining at Twinkling Star will not restart for another three weeks at the earliest and mine shutdowns have been reported across Hunan province's deep level antimony mines, sources said on Wednesday.

"I don't think Twinkling Star will be open for another month or so," one European trader said, reporting sales at $6,450 for standard grade II metal.

Despite the rising Chinese offers and the tightening domestic market, European traders and consumers are not desperate for material.

End-users are anticipating lower demand for antimony trioxide as the winter in the northern hemisphere draws in, and traders are limiting their shipments into Europe because of the limited consumer interest, they said.

"The whole situation is stupid – the Chinese are trying to create panic and the prices are ridiculous – the season [for strong buying] is over," one consumer said.

"There's no real demand and I am not going to buy for a while," he told MB, noting that offers have fallen to $6,450 per tonne in Europe already from highs of $7,000 per tonne a week ago.

A second consumer also maintained that the price rise is "artificial", and driven by trader speculation in Europe and China.

European traders disagreed, saying that they are also struggling with the high prices from China.

"That right, it's all manipulated. I am actually buying at $5,700," joked one trader.

"I wish I could buy at $5,700," he added, reporting small sales at $6,500 per tonne.

Antimony ingots,antimony trioxide holds firm on tight supply

Antimony prices held firm on Friday as supply in Europe remained tight and Chinese suppliers maintained their high offers.

Trioxide-grade metal is trading at $6,275-6,475 per tonne and standard grade II metal is trading at $6,250-6,450 per tonne.

Prices surged in the first half of the week following a fatal accident and the subsequent suspension of all mining activity at Hsikwangshan Twinkling Star, the world's largest producer of the minor metal.

"Since the [MB] prices went up on Wednesday, I have had a lot of demand. I have had calls from Chinese people, from consumers, from European traders," one trader said. "The consumers have not stopped bidding me all week."

Business was reported in the second half of the week between $4,300 and $4,500 per tonne, with traders reporting tight supply in Rotterdam.

Offers out of China have been as high as $7,000 per tonne this week, although most material is offered at around $6,500 per tonne.

No material is expected to arrive in warehouses from China for another three to four weeks, market participants said, adding that they are expecting the mine suspension at Twinkling Star to continue for the next month at least.

"The mine will not be reopening for a month, and it could be three months before they reopen fully," the first trader said.

A second trader agreed that demand has been good this week, but forecast little upside in antimony from this week's levels.

"I have heard some ridiculous numbers this week above $6,500, but fundamentally I still see the trade as comfortable at the highs… Yesterday, there was very heavy trading, there was a lot of volume sold," the second trader said.

With demand from cable manufacturers set to decline as the northern hemisphere winter draws in, prices are unlikely to gain more ground, consumers and traders said.

"I don't see us getting much beyond the 2008 high," the second trader said.

Trioxide-grade antimony peaked at $6,850 per tonne in September last year, an all-time high for the metal. Prices then fell back to $4,200-4,400 per tonne by the end of 2008 as slowing industrial activity hampered demand.

Antimony trioxide prices continue to increase in the US

19 Oct 09 – Prices for antimony continue on the rise this week as participants report purchases completed last week in the USD5,700-USD5,800/t for antimony trioxide 99.5%min of Chinese origin. Participants anticipate that the price for antimony trioxide will reach the USD6,000/t mark by the end of the month as the effect of the Twinkling Star production stand-still for safety inspections begins to affect product availability.
Asianmetal(English) http://www.asianmetal.com FE4Q
A California-based trader, who moves about a container of antimony products a month, confirmed that the prices for antimony products are on the rise. The trader said that he purchased a container of antimony trioxide 99.5%min from a Chinese source late last week at USD5,800/t CIF California, for late November delivery. He stated that his previous purchase of a container of antimony trioxide 99.5%min was concluded at about USD5,200/t CIF California in early September.
Asianmetal(English) http://www.asianmetal.com 58P1
"The prices for antimony products have increased a lot since news of the mining accident two weeks ago. I expect prices to continue its upward trend well into November as the effects of the mine and smelter closures in Hunan begin to affect the availability of antimony products," said the source.
Asianmetal(English) http://www.asianmetal.com 55P5
A California-based consumer in the chemical industry, with a monthly consumption of one container of antimony trioxide a month, signed a contract for a container of antimony trioxide 99.5%min early last week at USD5,750/t CIF California also for November delivery. The buyer disclosed that the price for antimony has increased by about USD4,00/t since his last purchase was finalized in September. At this time, he does not expect the price to stabilize until the end of the year.