SOURCE: marketfriendly, inc.

marketfriendly, inc.

March 04, 2010 07:05 ET

Changes in Use of Scrap Metal Puts Added Pressure on Molybdenum Miners

LIBERTY, MO--(Marketwire - March 4, 2010) - marketfriendly, inc. research finds that the conventional molybdenum market model is flawed because it does not account for scrap metal. Forecasts made from such a model will be impaired as a result.

By studying the scrap metal market, one can see that the recession was a scrap dealer's recession more than a miner's recession: The mills hurt most -- American and European -- are scrap-based. The mills hurt least -- Chinese -- primarily use virgin materials.

The ongoing shift in world steelmaking capacity from West to East clearly favors virgin materials, but even the existing scrap-based mills are using more virgin materials in their mix.

Change in the relative usage of scrap in steelmaking will cause change in demand from the miners, above and beyond that driven by the organic growth in the molybdenum market.

The picture is better for the miners than the legacy model suggests.

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