Almost on queue, the beginning of 2011 brought with it increasing prices for the technology metals gallium, germanium, indium and tellurium. The trend began in November of last year when a smelter closure in Shaoguan resulted in germanium producers pushing prices for germanium metal and germanium dioxide upward, after prices had been stagnant for almost two years. In the case of germanium, a smelter closure may have been a catalyst for higher prices, but as our previous reports have outlined, the prices for all technology metals, which all have a significant proportion of their primary production in China, are coming under pressure from increasing production costs in China. The gradually appreciating yuan has done little to relieve inflationary pressure on energy and labour costs. This has been reflected in China’s producer price index (PPI), which reached an eight-month high of 6.6% (y/y) in January. Germanium’s 70% price increase over the past 5 months has provided some room for fluctuation, but given that the root cause of the price increases – excess cash in the Chinese economy – has not been effectively addressed, we do not expect to see significant declines for germanium, or any other of these metals, in the first half of 2011.
Chart courtesy: www.metal-pages.com
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