Moly dosiahol vrchol nad $30/lb

Pod hrozbou obmedzenia vývozu molybdéna a spustenia Moly fondu (ETF) sa cena vyšplhala až nad úroveň $30/lb.

Since storming back into investors’ hearts a few years ago, molybdenum’s been a fairly volatile market - with prices spanning from the low single digits to highs above $40/lb.

But with threats of Chinese export controls and the launch of new ETF in Canada, an already tight supply situation has recently gotten much worse in the moly market, sending spot prices above $30/lb. in recent days. With that move, shares of primary molybdenum producers have taken off – with new 52-week highs almost a daily occurrence.

Reasons for a Rise

Among the biggest reasons moving the market is the launch of a moly-based ETF in Canada. Run by Sprott Asset Management, the Sprott Moly Fund is expected to invest up to C$150 million in moly related equities and the actual metal. Just as was seen with the launch of last year’s silver ETF (and given the relatively minuscule and illiquid nature of the moly market and equities), the expected spike in demand is already moving both the metals and the equities to new highs.

Another major factor affecting prices in Chinese supply, after that country’s government announced earlier this month that it plans to introduce a quota system for molybdenum exports in the near future. The quota system will only grant export permission to those firms with export volumes of over 3,000 tonnes and with registered capital of at least RMB 100 million (approximately US$13 million).

While it’s uncertain how much this will impact Chinese moly exports, the country export product has already decreased by 10% over the past year (following the adoption of an export tariff last fall). For a country that supplies 20% of a metal in a tight supply-demand market, that’s nothing to sneeze at. The export restrictions came into play because of the jump in Chinese demand for the metal (coincident with the growth of the steel industry, as molybdenum is primarily used to strengthen various steel products), and the Chinese government’s growing desire to retain more of its metal production for domestic use.

Beyond being used in steel for the construction industry, molybdenum is also critically important to the energy complex. According to Sprott Asset Management, a 5,000-foot oil well requires 50 tons of molybdenum-hardened steel to drill; a 15,000-foot well requires a whopping 1,100 tonnes.

Source: ResourceInv


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