You can literally trace the arc of human history based on when we learned to use particular metals.

In the beginning, we fashioned primitive tools and weapons of stone by striking harder rocks against softer ones. After a few thousand years, an ancient smith got the bright idea to alloy copper with tin, creating a metal that was stronger that stone but could be easily cast in any form they wished and was much more valuable. Thus, the Bronze Age was born.

After a couple of millennia of working in bronze, blacksmiths developed the technology to work in iron and primitive forms of steel. The metal was heated and then hammered into weapons, tools and jewelry, ushering in the Iron Age.

Since then, we’ve progressed beyond even iron as technology has developed and needs have changed. Today we use metals that have only become know in the past two hundred years or so and the timeframe in which they have been commercially produced can be measured in decades.

Molybdenum is one such metal.

While its existence was long suspected, it isn’t found in a pure form, so it wasn’t isolated until the late 1700s. For nearly two centuries the metal was little used, despite being known to strengthen steel when added as an alloy.

That changed in 1917 with the outbreak of World War I, when the British and Germans both began using molybdenum to produce stronger armor for their tanks and to make barrels for heavy artillery. Molybdenum-doped steel can withstand much higher temperatures.

From that point, molybdenum consumption began to grow at an exponential rate. Tt’s still primarily used as an alloying agent, but it has also found uses as a fertilizer, a catalyst agent in pollution control equipment, medical imaging and lubricants, just to name a few. In fact, it is often considered one of the key metals critical to the continued development of the global high-tech economy.

As the effects of the recession have rippled through the global economy over the past five years or so, molybdenum prices have nosedived, falling by more than a third just over the past two years (see graph, below).

Given that it’s primarily used as an alloying agent and the stainless steel market remains extremely weak, that sharp decline in price is hardly surprising. Nonetheless, molybdenum consumption grew by 14 percent in 2011 and was flat last year. But as the global economy continues to improve, demand growth is expected to average about 4.6 percent annually over the next five years or so.

But even as demand grows, supply is tightening.

China has long been the leading producer of molybdenum in the world, digging up 39 percent of global supply in 2009. During the last decade, it was also a leading exporter of the metal, sending about 80 million tons of it abroad in an average year.

That pattern has shifted, though, with China now consuming most of its molybdenum production itself. The country also won’t be exporting much of its excess either, since the government there has designated it a strategic national resource and instituted strict export taxes and lowered export quotas.

At the same time, global production has also slowed. Molybdenum is primarily produced as a byproduct of other mining activities, particularly copper mining, and annual production has been tightening with the general global decline in activity. In 2010 and 2011, mining production of molybdenum was flat and grew by just 4 percent last year.

As a result, molybdenum stockpiles have been tightening. While they’re not at critically low levels yet, they could be in the next year or so.

Demand for molybdenum could spike due to the sheer length of oil and gas pipelines slated for construction this year.

According to the Oil & Gas Journal, more than 6,100 miles of gas pipelines are slated to be built this year, as well as 4,469 miles of crude oil pipelines. An additional 4,726 miles of pipeline are expected to be put into place to move finished products.

Since molybdenum can withstand high temperatures and is extremely corrosion-resistant, it is often used as an alloy in pipelines, particularly those that transport gas. Each mile of pipeline typically contains more than a ton of molybdenum.

Considering China’s export restrictions, declining overall production and the fact that no new molybdenum-producing mines are slated to come online for at least two years, pipeline construction activity alone could quickly burn through the existing molybdenum supply.

That should help push the value of the metal higher over the next year or so, particularly if steel demand picks back up. Molybdenum producers will get a big boost, after suffering through several years of flat to falling spot prices.

See this issue’s stock spotlight for my top pick in molybdenum.