How do futures contracts help the minor metals industry?
Cobalt and molybdenum contracts will enable industry to hedge against volatility in prices. Hedging is the process of managing the risk of a price change by offsetting it in the futures market. The ability to hedge gives producers, consumers and merchants in the industry the choice of how much price risk they are prepared to accept. The process of hedging will also create for the first time a truly transparent and representative market price.