SHANGHAI (Interfax-China) -- China plans to introduce a quota system for molybdenum product export in order to conserve strategic mineral reserves, an analyst surnamed Yang with the China Metals Information Network Antaike, told Interfax today.
Yang estimated that the quota system will come into effect by either the end of this month or the beginning of April, as the government has not yet finalized quota limits for producers and traders.
In November 2006, RI reported that China had imposed an export duty on molybdenum oxide and ferromolybdenum of 10%.
China's molybdenum product export is set to decrease by 10% and export permission will only be granted to exporters with an export volume of over 3,000 tonnes in the last three years and traders in at least 1,000 tonnes in the past three years, according to China Nonferrous Metals News. Molybdenum exporters must also have a registered capital of at least RMB 100 million ($12.91 million).
Molybdenum is mainly used as an alloy to strengthen iron and steel, increasing the melting point and enhancing resistance to corrosion. The USGS puts the world moly resources at 19 million tonnes, with China accounting for 8.3 million tonnes.
International molybdenum prices have reached $80 per kilogram, up $20 from before the Spring Festival, while the domestic price has remained relatively low, Yang said.
Ferromolybdenum FOB price is currently $69-$72 per kilogram. In the past 15 years, the price of molybdenum has been as low at $1.82/lb and as high as $40/lb. Today’s price in pounds is about $28/lb.
Commentary
Molybdenum and related products have obviously seen a massive increase in demand in China over the past few years in line with the growth of the steel industry. Perhaps even more so in the past two years, considering China's increased output of high-end finished steel product and demand from the energy sectors.
China already has export restrictions in place by way of levies on ferromoly and moly-oxide. Nevertheless, with domestic demand showing little sign of peaking, China needs to protect its resources. These additional measures, and the resultant reduction in export forecasts, may further enhance the current bull market.
© Interfax-China 2007
This article comes from Interfax China Commodities Daily, a daily digest produced by Interfax News Agency in Mainland China. To receive 10 free copies of this, please e-mail david.harman@interfax-news.com.
