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General Moly to benefit as molybdenum price rises, oil sector recovers: H.C. Wainright

  • Thursday, January 25, 2018
  • Source:ferro-alloys.com

  • Keywords: molybdenum
[Fellow][Ferro-Alloys.com]The miner issued a market update Friday citing a 60% price increase in molybdenum since its 2016 price of US$6.70, recently topping US$11.00 per pound -- a level not seen in four years.

[Ferro-Alloys.com]The miner issued a market update Friday citing a 60% price increase in molybdenum since its 2016 price of US$6.70, recently topping US$11.00 per pound -- a level not seen in four years.

The company attributed the surge in part due to a global uptick in oil and gas drilling, as well as continued use of the element in specialty steel applications.

Wainright analysts were quick to pick up on the possible benefits.

“Improved supply and demand fundamentals for molybdenum could continue to push prices higher in 2018, just as the oil industry continues its recovery and by-product supply tightens,” the analysts wrote.

Wainright added that the price rise in 2017 came despite increased supply, which grew to 561 million pounds from 510 million pounds in 2016, and further supports the price hike.

Global economic expansion should also drive demand for stainless and high-strength steel applications worldwide.

“In our view, both factors should support demand growth for molybdenum in 2018 given its critical role in strengthening steel used in the oil and gas industry and other specialty steel application,” Wainwright wrote.

Looking ahead in 2018, the analysts also cited progress advancing the draft Supplemental Environmental Impact Statement (SEIS) of the Mt. Hope operation in Nevada for public review, as well as requested hearings to secure new water diversion permits.

The note also outlined several areas to watch, citing price risk, financing risk, permitting risk, and operating and technical risks.

Wainright has a “buy” rating and US$0.75 price target on the shares, which recently changed hands at US$0.37.

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  • [Editor:Jiang Li Juan ]

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