March 6, 2023

On March 13, the CME will launch cash-settled molybdenum oxide futures, according to their website. AEGIS notes that this product offering comes as both the physical and financial markets for battery metals have gained greater interest in the past 12 months. Moreover, this will provide a hedging tool for both producers and consumers. Molybdenum has traditionally been used to harden steel; however, is seeing greater interest in other applications, such as battery technologies. Also, molybdenum is a byproduct of copper mining, thus, copper miners can use the CME contract to lock in a revenue stream. Molybdenum prices have rallied nearly 120% in the past year due to supply issues and strong demand, according to Bloomberg. (Source: CME, Bloomberg)

AEGIS will watch this market as it matures and will keep customers and prospects abreast of any developments. We do caution that it sometimes takes a long time for new financial markets to gain traction. For example, the LME launched molybdenum oxide futures in 2010; however, interest has been essentially nonexistent. Moreover, there has been no open interest in LME molybdenum oxide futures since 2016. Prior to 2016, open interest rarely exceeded 40 contracts.

As we noted above, interest in the financial markets for battery metals has seen exponential growth in recent months. For example, aggregate open interest for CME cobalt futures is currently about 17,000 contracts, up from a mere 2,000 contracts in April 2022. Similarly, aggregate open interest in CME Lithium futures has grown from literally zero in October 2022 to nearly 600 contracts currently. Please note that CME Cobalt and CME Lithium do not have options markets. Please contact AEGIS for specific strategies that fit your operations. (3/6/23)

Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. 

Price Indications

Today's Charts

AEGIS Insights

03/01/2023: AEGIS Factor Matrices: Most important variables affecting metals prices

02/24/2023: European Aluminum Smelters Improve, But Not Enough To Entice More Production

02/07/2023: Will Aluminum's Rally Continue?

01/24/2023: Peruvian Protests Could Support Copper Prices

01/11/2023: Nickel Prices Could Remain Volatile Into 2023

3/3/2023: Volkswagen board discusses two new North America plants at meeting - sources

3/2/2023: Lithium miner SQM's profit more than triples on EV demand

3/2/2023: Aluminium open interest, volume on CME hit record high in February

3/1/2023: Tesla plans 6,000 jobs in Mexico and eyes more investment, government says

3/1/2023: Freeport Indonesia says Grasberg mine operations back to normal after floods

2/28/2023: Panama and Canada's First Quantum nearing agreement over copper mine -lawyer

2/28/2023: LME halts flow of Russian metals into its U.S. warehouses

2/28/2023: Column-United States targets Russian aluminium and other metals: Andy Home

2/28/2023: Analysis: Lithium price slide deepens as China battery giant bets on cheaper inputs

2/27/2023: A $1.5 billion hoard of copper and cobalt is piling up in Congo

2/27/2023: Stellantis invests $155 mln in Argentine copper mine

Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.