Molybdenum Trading: Getting Started Guide [+ Brokers by Country]

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Molybdenum is an important industrial element that traders can speculate on with various trading instruments.

We’ll explain how to trade this precious metal and where you can find a regulated, reputable brokers in .

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Reasons You Might Trade in Molybdenum

Traders should consider buying molybdenum for the following reasons:

  1. Bet on Strong Steel Demand
  2. Inflation and Weak US Dollar Hedge
  3. Portfolio Diversification

Bet on Strong Steel Demand

Expanding global demand for strong steel products should manifest itself in many sectors of the global economy.

China: The country continues to urbanize and industrialize its economy. Buildings, engineering projects and power plants are some of the many projects that require very strong steel alloys.

Molybdenum is certain to play a role in producing these alloys.

The United States: 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.

All of 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 have a limited number of options for gaining exposure to molybdenum prices.

Molybdenum Trading Methods Compared

Method of InvestingStorage Costs?Security Costs?Expiration Dates?Management Costs?Leverage?Regulated Exchange?
Molybdenum FuturesNNYNYY
Molybdenum OptionsN/AN/AN/AN/AN/AN/A
Molybdenum ETFsNNNYNY
Molybdenum SharesNNNNYY
Molybdenum CFDsNNNNYY

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 in order 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.

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 worldwide 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.

There is no ETF that 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 many companies that rely on molybdenum mining for a meaningful portion of their revenues including the following:

CompanyCurrent PriceDescriptionExchange
General Moly 

US mining company engaged in the exploration, development and mining of molybdenum and copper deposits, primarily in Nevada.New York (NYSE)
China Moly 

Chinese company that is the largest molybdenum producer in Mainland China. The company also mines for tungsten, copper, cobalt, niobium, phosphorus, and other base and precious metals.Hong Kong (HKEX)
Dynasty Minerals

Canadian-based company that mines for copper, gold and molybdenum in the United States.New York (NYSE)

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.

Where Can You Trade Molybdenum?

These brokers are available in :

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 71.00%-89.00% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Should I Trade in Molybdenum?

Traders who want to trade in molybdenum should consider purchasing the commodity along with a basket of other commodities that includes:

  • Base metals (i.e., copper, nickel, lead and zinc)
  • Precious metals
  • Agricultural commodities (i.e., dairy, meats and grains)
  • Energy.

Purchasing a basket of commodities helps protect traders from the volatility of any individual commodity. It also adds overall diversification to a stock and bond portfolio.

There are two specific trends that could raise molybdenum prices in the years ahead:

  1. Chinese Demand
  2. 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.

Shanghai via Wikimedia
Shanghai by Sahmeditor via Wikimedia

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

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