Risk Warning: Your Capital is at Risk.
In this guide to trading molybdenum, we’ll explain how and where you can trade this important industrial element. We also list regulated brokers that are available in .
In a hurry? If you are looking to get started with molybdenum trading, here are three brokers to consider:
Disclaimer: Availability subject to regulations.
Between 74-89% of retail investor accounts lose money when trading CFDs.
Contents
Reasons You Might Trade Molybdenum
Traders might consider buying molybdenum for the following reasons:
- Bet on Strong Steel Demand
- Inflation and Weak US Dollar Hedge
- Portfolio Diversification
Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.
Bet On Strong Steel Demand
Expanding global demand for strong steel products should manifest itself in many sectors of the global economy.
China continues to urbanize and industrialize its economy. Buildings, engineering projects, and power plants are some of the many endeavors that require very strong steel alloys.
Molybdenum is likely to play a role in producing these alloys.
The United States is expected to embark on major infrastructure projects over the next several years. Bridges, railways, airports, and other projects require major upgrades.
These projects will require significant quantities of strong steel and, therefore, molybdenum.
Inflation and Weak US Dollar Hedge
Trading on molybdenum is a way to bet on a weak US dollar and higher inflation.
Molybdenum is priced in US dollars, so the performance of the American economy can impact its price. The US Federal Reserve Bank has kept interest rates low and the US dollar weak for many years.
US central bankers are likely to continue these policies to support consumer borrowing and spending. These conditions are likely to be very beneficial for all commodity prices including molybdenum.
A weak dollar could stoke inflation concerns. There is a limited supply of molybdenum, and producing it is an energy-intensive endeavor. The price of the commodity would likely benefit from fears of inflation.
Portfolio Diversification
Most traders have the vast majority of their assets in stocks and bonds. Commodities such as molybdenum provide traders with a way to diversify and reduce the overall risk of their portfolios.
How to Trade in Molybdenum
Traders in have several options for speculating on molybdenum prices.
Molybdenum Trading Methods Compared
| Method of Investing | Storage & Security Costs? | Expiration Dates? | Management Costs? | Leverage? | Regulated Exchange? |
|---|---|---|---|---|---|
| Molybdenum Futures | ❌ | ✅ | ❌ | ✅ | ✅ |
| Molybdenum Options | N/A | N/A | N/A | N/A | N/A |
| Molybdenum ETFs | ❌ | ❌ | ✅ | ❌ | ✅ |
| Molybdenum Shares | ❌ | ❌ | ❌ | ✅ | ✅ |
| Molybdenum CFDs | ❌ | ❌ | ❌ | ✅ | ✅ |
Molybdenum Futures
The London Mercantile Exchange (LME) trades a contract on roasted molybdenum concentrate that contains molybdenum of 57 to 63% purity.
Each contract represents 6 metric tons of molybdenum and is quoted in dollars.
Futures are a derivative instrument through which traders make leveraged bets on commodity prices. If prices decline, traders must deposit additional margin to maintain their positions.
At expiration, the contracts are physically settled by delivery of the metal.
Trading in futures requires a high level of sophistication since factors such as storage costs and interest rates affect pricing.
Molybdenum CFDs
One way to trade in molybdenum is through the use of a contract-for-difference (CFD) derivative instrument.
CFDs allow traders to speculate on the price of molybdenum without owning it.
The value of a CFD is the difference between the price of molybdenum at the time of purchase and its current price.
Some regulated brokers offer CFDs on molybdenum. Customers deposit funds with the broker, which serve as margin.
The advantage of CFDs is that traders can have exposure to molybdenum prices without having to purchase shares, ETFs, futures, or options.
IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.
Molybdenum ETFs
These financial instruments trade as shares on exchanges in the same way that stocks do.
ETF offers pure-play exposure to molybdenum prices.
The VanEck Vectors Rare Earth/Strategic Metals ETF (NYSEARCA: REMX) invests in many companies that mine for molybdenum as well as other rare earth metals.
While trading in companies can be a leveraged way to gain exposure to molybdenum prices, factors such as company management and the overall stock market can also affect these trades.
Shares of Molybdenum Companies
There are some companies that rely on molybdenum mining for a portion of their revenues. That said, General Moly, one of the leading molybdenum mining companies filed for bankruptcy in 2020.
Other mining companies that have molybdenum on their roaster include:
| Company | Current Price | Description | Exchange |
|---|---|---|---|
 | The largest copper producer in the World., also mining molybdenum. | New York (NYSE) | |
 | Anglo-Australian multinational mining, metals and natural gas company. | London (LSE) New York (NYSE) Johannesburg (JSE) Sydney (ASX) | |
 | Australian-British multinational with operations in mining and metals. | London (LSE) New York (NYSE) Sydney (ASX) |
Where Can You Trade Molybdenum?
The following brokers are available in , some of which offer stocks, rare-earth mining ETFs, and other instruments that may be of interest to traders speculating on molybdenum prices:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Should I Trade in Molybdenum?
Two trends could raise molybdenum prices in the years ahead:
- Chinese Demand
- Infrastructure Demand
Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.
Chinese Demand
China is the top consumer of molybdenum and is likely to increase its consumption in the years ahead.
Industrialization and urban sprawl in China should fuel demand for strong steel alloys. Essentially, trading in molybdenum is a bet on a resurging Chinese economy.
Infrastructure Demand
Construction and infrastructure could represent a very large percentage of future molybdenum demand.
The United States is planning large-scale infrastructure projects to replace dilapidated bridges, airports, and transportation systems.
Most of these projects will require strong steel alloys made from molybdenum.
However, traders should also consider the risks of trading in molybdenum:
A global recession could weaken Chinese demand and put infrastructure plans on hold. Overproduction of the metal or increased stockpiling by China could create a supply overhang on the market and send prices lower.
Global economic or political turmoil could strengthen the US dollar and weaken demand for commodities.
Further Reading
Want to find out more about commodities, especially precious metals? Read some of these guides and start your research:
- Learn More About Molybdenum as A Commodity
- Learn About Trading Precious Metals
- Find an Online Broker
- Learn How to Trade Commodities
