Molybdenum is a type of metal that is silvery white in colour. Before it was classified as a separate element, it was initially confused with lead, as in its natural unrefined state it had many of the same properties: it was soft, grey and had a metallic lustre. It is a chemically stable element, reacting only with certain acids. The most unique feature of molybdenum is its melting point, which is the fifth highest of all the known elements at 2623 degrees Celsius (which is roughly 1000 degrees higher than the melting point of steel, for example). It forms naturally underground in environments with extremely high temperatures, from where it can be obtained by mining molybdenite ore.
Molybdenum is a newcomer to the commodity market, with molybdenum futures appearing on February 22nd, 2010 at the London Metal Exchange (LME), the main centre for the worldwide trade of non-precious metal commodities. As the molybdenum market is so new, it is here where most molybdenum trading is carried out. The LME molybdenum price is now considered the benchmark price for molybdenum worldwide.
Molybdenum has several unique features as a commodity. One of its most appealing features is that new applications that are relevant to the current social and political climates are still being found. For example, it is thought that molybdenum could be utilised in the renewable energy sector, replacing the much more expensive platinum as a catalyst for the formation of hydrogen gas from water. It may also be employed in solar power technology, and when these new uses are combined with the already extensive list of uses that molybdenum has, it is easy to see why the molybdenum market is set to expand rapidly.
The main consumer markets for molybdenum are the iron and steel industries, which account for around 75% of all the molybdenum consumed globally. Molybdenum is frequently alloyed with steel to produce items that are exposed to high temperatures, taking advantage of molybdenum’s extremely high melting point. An example of this would be the filament inside a light bulb. Molybdenum is also used in the construction of a wide variety of other items made from stainless steel, such as water distribution systems, food handling equipment and hospital tools. Dry lubricants made from molybdenum are even used on spacecraft, and molybdenum’s high melting point makes it the ideal material from which to craft parts for furnaces and metal works.
In terms of production, the United States is the most prolific, with China and Chile coming second and third respectively. There is estimated to be around 19.5 million tonnes of molybdenum worldwide, with around a quarter of this residing in the U.S.
If one wishes to trade or buy molybdenum, there are several factors to take into account. Firstly, it is worth noting that molybdenum has few substitutes: there are only four elements with higher melting points and very few that have similar alloying capabilities. This is likely to mean that molybdenum price charts will show an increase in molybdenum prices as more and more uses are found for this important metal, and as supplies eventually decrease (although current reserves are expected to last for the foreseeable future). The newness of molybdenum as a commodity may also mean that the market for it has not yet stabilised, and so it may be an ideal time for investors and institutions participating in commodity trading to look into molybdenum futures. The molybdenum price will also be affected by, as with most commodities, the state of the economy: periods of economic growth will likely see the industrial usage of molybdenum increase, while periods of economic decline may reduce demand for molybdenum, and therefore the price.
Ready to Start Trading Molybdenum Commodities?
We recommend Plus500, who offer…
- Up to 1:50 leverage
- £20 free credit
- Smooth web-based, Windows, iPad & iPhone trading