| Molybdenum: Its Time has come to Rally… |
|
|
| Written by Ian L. Cooper | |||
| Tuesday, 24 April 2007 | |||
|
Overview: With nickel climbing so ferociously over the last year, the momentum has begun spilling into molybdenum, another metal (like nickel) that can enhance the corrosion resistance in stainless steel (about 10% of the world stainless steel production utilizes molybdenum). Molybdenum is used with chromium to augment corrosion resistance. Editor, Red Zone ProfitsCommodities have retaken the headlines, with red-hot nickel nailing new highs. In fact, commodities are so hot that the Rogers International Commodity Index has already tacked on about 20% in value this year alone. But what’s with nickel? Nickel has been scalding hot (up 45% in price), more than any other London Metal Exchange- traded metal. It’s now four times the price of copper and stands as the most profitable of all metals to mine, all while nickel inventories trade at lows. But that run is far from over. Not as long as nickel inventories are expected to remain tight up to 2010; not while mining companies have problems expanding capacity to meet demand from China’s stainless steel makers; and not as long as China’s nickel demand is expected to rise 33% by 2011 from 2006’s 18% demand. You see, nickel is a vital ingredient in stainless steel. In fact, two-thirds of the world’s nickel supply is used in stainless steel production. Stainless steel isn’t just used for high-end kitchen appliances and car parts. It’s also crucial to natural gas and oil pipeline builders because it doesn’t corrode. And wouldn’t you know it… China has recently earned the distinction of the world’s largest stainless steel producer. In 2006, China produced over 5 million tons of stainless steel. That was a 60%, or 3 million ton, increase over its 2005 totals. That growth more than quadrupled the world average of 14%. It’s a fact -- China is fueling demand for nickel in a way that we’ve never experienced. And the smart money is going to follow this trend as long as it continues, which is for the foreseeable future. More of a reason to own nickel-related stocks is that low supply levels are expected to keep the market “tight” right up to 2010, with this year’s average prices already forecast to soar another 34%. In fact, according to MarketWatch.com, “Consumption growth will slow to 2.9% in 2007, down from 11.9% last year but expected to rebound again to 7.4% in 2008.” The smart bet on the commodity super cycle is nickel. Keep an eye on it. Investing in Nickel: Giving Rally to Molybdenum
Those who missed the nickel and uranium runs can take comfort in knowing that molybdenum is the next super-hot investment. This is the metal that can resist heat, cold, and corrosion better than steel. And thanks to increased demand from the likes of, you guessed it, China -- the white-hot metal has been soaring since January. In part, China can be blamed for the supply issue. You see, back in 2005, Hubei residents blamed molybdenum mines for poisoning the Chaoshui River. In response, rioters destroyed about 200 molybdenum mines, crippling global supply.
Moly Mines (listed on the Australian Stock Exchange and Toronto)…
Blue Pearl (BLO.TO), which, according to reports could produce as much molybdeunum in 2007 as Cameco produces uranium. Blue Pearl, the largest publicly traded molybdenum producer, has plans to mine about one- fifth of the world’s molybdenum this year alone… Idaho General Mines Inc. (GMO) is permitting and developing the Mount Hope project, a project estimated to hold 1.2 billion pounds of recoverable molybdenum. Once in production, the mine is expected to produce approximately 30-35 million pounds of molybdenum annually, which potentially positions Mount Hope as one of the world’s largest and lowest cost molybdenum producers. Investing in Commodities: Nickel Gain Is Molybdenum’s GainWith nickel climbing so ferociously over the last year, the momentum has begun spilling into molybdenum, another metal (like nickel) that can enhance the corrosion resistance in stainless steel (about 10% of the world stainless steel production utilizes molybdenum). Molybdenum is used with chromium to augment corrosion resistance. And while molybdenum deposits are more common than that of nickel, there’s still the problem of short-term supply for a $12 billion molybdenum market. And there’s no shortage of demand. In fact, global demand for molybdenum has been growing at a 4% clip every year for the last 50 years. In China, alone, demand for the metal shot up some 20%.
Investing in Commodities: How to Invest in MolybdenumAs I stated above, these are the stocks to watch: Moly Mines (listed on the Australian Stock Exchange and Toronto)… Blue Pearl (BLE.TO), which, according to reports could produce as much molybdeunum in 2007 as Cameco produces uranium. Blue Pearl, the largest publicly traded molybdenum producer, has plans to mine about one-fifth of the world’s molybdenum this year alone… Idaho General Mines Inc. (GMO) is permitting and developing the Mount Hope project, a project estimated to hold 1.2 billion pounds of recoverable molybdenum. Once in production, the mine is expected to produce approximately 30-35 million pounds of molybdenum annually, which potentially positions Mount Hope as one of the world’s largest and lowest cost molybdenum producers. There you have it. Even if you missed the nickel and uranium runs, welcome to molybdenum’s 2007 bull market.Take care, Ian L. Cooper Editor, Red Zone Profits |
|||
| < Prev | Next > |
|---|
More:
- All Articles & Reports
- Articles & Reports by Author