Reuters reported that Chile's Codelco has no plans to use the soon to be launched London Metal Exchange molybdenum futures contracts to hedge against price risk.

Mr Roberto Souper VP of commercialization at Codelco said that it was too early for the Chilean state run miner, which is also the world's top copper producer, to decide whether to participate in the new contracts.

However, Mr Souper, who is in charge of Codelco sales, said that the contracts provided a good opportunity for both consumers and producers of the silvery metal used to strengthen steel as demand is seen on the rise.

He added that "We have a positive view concerning molybdenum futures contracts as it will give greater liquidity to the market and allow access to last resource markets. We do not seek hedging to lower price volatility risk in copper and neither we plan to do it in molybdenum."

He said that Codelco sets monthly average prices with clients to battle price volatility. Market players are interested in the new contracts and the company expects them to work efficiently. He added that "We have had a good experience with our clients in the current way we price our contracts using Metals Week. However, we also had a good experience with clients when it comes to copper prices in the LME."

He said that experts see world consumption of molybdenum increasing up to 10% in 2010, although the company believes prices are unlikely to reach record highs this year. Molybdenum oxide set record highs around USD 39 a pound in May 2005 on mounting worries about supply shortages.

(Sourced from www.reuters.com)