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Codelco will not hedge against LME molybdenum

Thursday, February 18, 2010

Source: Hoovers

Molybdenum producer Codelco isn't planning on using the upcoming LME molybdenum futures contracts to hedge against price risk, the company announced.

"It's 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," Codelco's vice president, Roberto Souper, was quoted as saying.

"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," Codelco's sales top Souper said. "We do not seek hedging to lower price volatility risk in copper and neither we plan to do it in molybdenum."

"Codelco sets monthly average prices with clients to battle price volatility," he said.

"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 added.

The new molybdenum and cobalt contracts will start trading on the LME on February 22.

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