What is Molybdenum?
Molybdenum is a silvery-grey metal and Molybdenum minerals have been recognised for centuries, but the element was discovered in the late 1700s. Molybdenum has a very high melting point and therefore is included in various types of high strength alloys and superalloys. The annual global production of Monybdenum is relatively small at 250,000 tonnes and China and the United States are the largest producers.
Uses of Molybdenum
More than 80% of molybdenum produced is used in metallurgical applications such as alloys, with the remaining molybdenum being used as compounds in chemical applications. An estimated percentage breakdown of global industrial use of molybdenum is structural steel 35%, stainless steel 25%, chemicals 14%, tool & high-speed steels 9%, cast iron 6%, molybdenum elemental metal 6% and superalloys 5%.
Risks of Molybdenum
Like any futures contract, there is always the possibility that the underlying asset i.e. Molybdenum will move in the opposite direction to which you anticipate. For example, you take a long position expecting the price of Molybdenum to rise and instead, it falls.
With any commodity, supply and demand will affect the price. This risk should be monitored on a regular basis and adjusted to suit your risk parameters. Mining of metals has an inherent risk with the level of costs associated with extracting the product from the earth.