It has been nearly a year since we last wrote about molybdenum. Molybdenum just doesn’t get the “airtime” that the other metals receive, mainly because it is used as an alloying element to make high-strength steels along with stainless steels, super-alloys and tool steel. However, 2010 could prove an interesting year for molybdenum as it, along with cobalt, will trade on the LME by the end of February, according to the LME website. Already, people believe the metal will make a “massive comeback if for no other reason in that the price has hit its five-year low and the arrival of the new futures contract will bring more market transparency and market participation. The contract will be priced in US dollars. Here is a five-year historical chart from InfoMine:
After just having done an interview with FoxBusiness yesterday, the final question came to us, “What do you think? Single stocks or ETF’s? Of course, working with metal-buying organizations, we probably don’t pay too much attention to the stock price of all the companies our clients buy from. But if we learned one lesson in 2009, it was this: once a market opens up for Ëœother’ market participants, the price tends to follow. We should also point out that metal-buying organizations have the opportunity to also take advantage of these contracts. As my colleague wrote on these pages a year ago, “Although the new market will allow producers and consumers to hedge their forward sales and purchases, the greatest beneficiaries will probably be the smaller processors in between who will be able to hedge their exposure on their WIP (Work in Process).
We’ll keep you posted on both the cobalt and molybdenum LME contracts.