How are Metal Prices Controlled

Prices of metals that are not traded on terminal markets like the LME or the bullion dealers’ market generally find their price levels by supply and demand. Many are traded on long-term contracts between consumers and producers — for example, a steel producer might have contracts for the supply of iron ore, chromium, and nickel with several producers.

In the absence of daily spot prices and futures prices, the important price is the producer price. Most often producer prices will be set for several different grades or forms of the metal. For example, there are separate prices for refined cobalt, cobalt powder and cobalt oxide.

Similarly, iron ores are graded for sale, based on the amount of contained phosphorus, silica and other impurities. Iron ore pellets are the preferred form of iron among steelmakers. Prices are quoted per tonne for international trade.

Metals used in steelmaking, such as manganese, chromium and vanadium, may be sold as refined metal, ore concentrate or alloyed — at a specified concentration — with iron.

Two other important alloy metals without terminal markets are tungsten and molybdenum. Tungsten is sold as ore concentrate or ferrotungsten, while molybdenum is generally quoted at a price per pound of molybdenum contained in a molybdenite concentrate.

The price of uranium is affected by political factors related to its military use. While a market does exist for sales of small lots on a spot basis at a price called the “exchange value’, most uranium is sold to public utilities under long-term contract.

No matter how the metal occurs in the mine, uranium is sold in U.S. dollars per pound of U3O8 (a uranium oxide). Mine output is priced accordingly.