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Cobalt and molybdenum are by-products of metals already traded on the Exchange but until now there has been limited opportunity to manage risk. LME contracts provide transparent and accurate pricing and the means to deal with market volatility.
Significant portions of the cobalt and molybdenum market want increased price transparency to enable them to manage their price risk and cashflow better and to predict profits more effectively.
The introduction of exchange-traded derivatives enable all of these activities as well as price transparency through a forward price curve out to 15 months.
The LME has received support for the development of cobalt and molybdenum futures across the supply chain, from producers, consumers, physical metal traders and also LME member firms.
Unlike some exchanges, the LME designs futures contracts to address particular industry needs, and consequently, cobalt and molybdenum industry input and feedback has played a major part in the development of these contracts.
LME members are already familiar with the cobalt and molybdenum industries and both industries know the exchange well.
With growing production, healthy spot demand and volatile prices, cobalt and molybdenum look set to prosper on the LME as part of a range of metal futures contracts.
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