Strategic Metal Report

Indium Market Update - July 2013

Indium prices have shot up US$ 40-50 per kilogram over the past two weeks based on Chinese speculators heading to North America and Europe to bid on the metal.

Speculators are assuming that the Fanya Exchange (discussed last month) will continue to buy up all Chinese indium production, and by removing this material from the market international prices will increase to fall in-line with current Chinese market prices, which are a still another $30-50 per kilogram above non-Chinese prices.

If speculators are able to secure large amounts of non-Chinese indium, it can be expected that all prices will continue rising.

Indium & the Investment Industry

One topic that has repeatedly appeared in reports about the indium market over the past year is the increasing influence of investors on demand for the metal.

Since 2011, the investment industry has grown to become a significant consumer of indium. In China, two commodity exchanges allow companies and individuals to electronically trade contracts of the metal, while in Europe and the West, private asset companies offer opportunities to make investments backed by various minor metals, including indium.

The potential impact on the market comes from the fact that the inventories held by these investment companies and exchanges can be removed from the market for indefinite periods, depending on investors' goals and expectations.

One of the lead sponsors at this year's World Indium and Germanium Forum, which recently concluded in Kunming, China was the Fanya Metal Exchange, which began offering investors an opportunity to trade units of indium via their online trading platform in 2011. The investors trading on the Fanya Exchange can trade indium in units as small as 500g, while prices are quoted in 100g units.

As the Fanya Metal Exchange promoted and grew interest in the metal amongst investors, it also significantly increased its inventory holdings of indium, which caught the attention of both consumers and refiners.

Many in the industry have questioned the disconnect that seems to exist between electronic trading of indium and the physical market for the metal. This divide is highlighted by the price differential between the Fanya Metal Exchange's price, which is presently over $900/kg of 99.995% min. indium metal, and the physical market price, where equivalent material is currently available for prices around US$ 540/kg.

For both producers and consumers of indium, the concern is that increasing speculation and hoarding of the metal will cause a spike in prices, which would stifle development of new downstream markets for indium products.

One does not have to look any further than the impact that investors and speculators had on the rare earth (RE) industry in 2009 and 2010 in order to understand how much price volatility can have on demand.

Minor Metal Market Update - October 2012

Strategic purchasing and materials being held from the market have pushed prices for many minor metals higher in recent weeks.

Despite high inventories, tellurium prices rebounded in Q3 after nearly a year of steady decline, in large part due to many high purity refiners refusing new offers.

Germanium prices appear to be stabilizing at the start of Q4 after an unanticipated run-up of nearly 70% since April. The jump in prices spurred buying activity - particularly for germanium dioxide - over the summer months.

Indium prices, meanwhile, have been pushed higher by the Chinese State Reserve Bureau's (SRB) purchases of the metal at above market prices. Purchases by the SRB in the second half of 2012 may end-up accounting for as much as 15% of global production this year.

With large inventories to draw on, whether indium's price gains stick will largely be dependent upon how much purchasing activity is seen in the remaining months of 2012.

High inventories of 99.99% gallium continue to drag on prices for the metal. While offer prices increased slightly in Q3, it may be some time before consumption increases to levels high enough to absorb excess inventories that have built up since new production was brought on-line earlier this year.

Indium Market Update - September 2012

Despite high inventory levels in China, the price discrepancy between Chinese and non-Chinese indium looks like it will persist through September. 

While prices for 99.99% indium metal remain around USD 560/kg in China, supported by the recent state stockpiling purchase of 60 metric tonnes, prices elsewhere have been trading between USD 470-500/kg.

Although many Chinese producers are holding inventory of the metal and stocks at the Fanya Metal Exchange in Kunming recently reached record high levels, metal imports have been reported through the summer, as financial exchanges trading indium have sought cheaper sources to meet their inventory requirement levels. 

Gallium & Indium Prices Reflect Solar Industry Woes

Gallium and indium producers have, in recent years, repeatedly identified CIGS (Copper Indium Gallium diSelenide) solar technology as an increasingly important market for their production, with new demand from this sector being a justification for price increases and capacity expansion.

Unfortunately for those depending on the growth of CIGS technology, recent months have provided nothing but a series of bad news. Most recently, First Solar Inc. - the market leader in photovoltaic (PV) cells - announced that it will be ending its CIGS research program.

The announcement follows CIGS specialist Solyndra LLC's application for bankruptcy protection in August and Aurubis' closure of CIS Solartechnik last month.

With intense competition at both the corporate and national levels, the profitability of solar energy companies is under growing pressure. Government austerity measures, low energy prices and slow economic growth contributed to First Solar cutting its 2011 sales expectations.

Both indium and gallium prices have been fighting to find some stability since they began falling in August.

Chart courtesy of Metal-pages.com

Indium Market Update - December 2011

A short pause in November has been the only recent respite from the current decline in indium prices. With lower than expected third quarter orders and high inventories, the price of indium has been pushed to its lowest point since late 2010, trading around US$ 550/kg. Some producers are beginning to hold material, unwilling to sell at the current price, rather choosing to wait - and hope - for something better in 2012.

Chart courtesy: Metal-pages.com

The End of ITO?

Indium tin oxide (ITO) has been critical to the development and success of flat panel displays over the past decade and is expected by many to be a key component in the continuing development of high efficiency solar cells. However, a new technology under development by Duke chemist Ben Wiley may displace ITO and, consequently, have a significant impact on indium markets.

The research, outlined in the August 24th issue of Advanced Materials shows that copper nanowires produced in water can form long, thin, non-clumping wires, which can be used to manufacture transparent films that have the same properties as ITO films, but would be significantly cheaper to produce. The copper nanowires have also shown to be more durable than their counterpart, able to withstand repeated bending while retaining conductivity.

The demand for ITO for use in flat screen TVs, smart phones and solar cells has led the price of indium from around $ 150 per kilogram in 2000 to highs above $ 1000 per kilogram in 2005. Currently, indium metal prices are around US$ 650 per kilogram.By contrast, copper prices, while historically high, are only about US$ 9 per kilogram.

 

A new flexible, transparent film made from copper nanowires could compete with thin films produced using ITO. Image c/o Ben Wiley, Duke University

Indium & Germanium Forum 2011

Discussions at the Asian Metal Indium and Germanium Forum (May 9 to 11 in Nanjing) were focused on two topics this year; Germanium buyers were inquiring as to the reasons behind the metal’s recent price growth, while indium producers and traders contemplated whether indium prices will continue their current rally.

As reported here on SM Report, germanium prices have been moving invariably upward since late last year. In April, prices grew by another twenty percent, although purchasers have been left wonting for an explanation as to why. While demand for germanium dioxide has rebounded over the past year, demand from the germanium optical lens industry continues to be limited by declining military spending. It is the first time in over a decade that germanium prices have decoupled from military spending and, instead, have begun to show greater dependence on demand for germanium dioxide. Whether this is a long-term development remains to be seen.

Although indium prices have not risen as sharply as germanium prices, there still remains high expectations that the current rally is not over. Both indium buyers and sellers are also beginning to acknowledge the influence that indium speculators are having on the market. As material is diverted – or held – from the market by speculators, consequent supply constraints have pushed prices higher than some analysts initially expected. Indium Corp., nevertheless, believes that greater reclaim recovery yields, along with increased global primary production will reduce current demand strains over the coming two to three years.

SMI Ltd. is advising clients to expect indium prices to continue higher in the second half of 2011, as producers and speculators both look to capitalize on the currently strong demand. Germanium users, meanwhile, should not expect any significant drops in germanium prices until late Q3 or Q4 2011. However, without greater demand from the optical lens industry, germanium producers will be hard-pressed to hold current price levels into 2012.

 

Indium Market Report - November 2010

The impact of quantitative easing has pushed international prices for most minor metals higher over the past month. The current financial environment, along with expectations of an increase in seasonal demand for indium, has resulted in Chinese indium prices rising to around US$ 525-550 per kilogram. Producers and traders in China, who have been holding most of the market’s excess inventory, are hoping that Christmas sales of touch screen and other LCD display units will result in greater demand – and higher prices – for indium, as producers re-stock inventory in early 2011.

Given the current market and expectations for indium prices, SMI Ltd. expects to see indium prices of between US$ 525-575 per kilogram for the remainder of 2010. While the potential remains for indium to reach US$ 600 per kilogram in the first quarter of 2011, this will be heavily dependent upon US monetary policy over the coming months and LCD sales during the holiday season.

Coverage from Minor Metals & Rare Earths 2010 - Xiamen, China [Part II: Minor Metals]

A wide range of reports were presented at Metal Pages’ Minor Metals & Rare Earths conference this year, which not only covered a variety of metals, but also included perspectives from privately held and publicly traded producers, exploration and development companies, as well as research organizations.

Two presentations specifically examined the current indium market. Growing use in liquid crystal display (LCD) and cadmium-indium-gallium-selenide (CIGS) photovoltaic applications have attracted much attention to the indium market over the past five years. Feng Yuncong, from the Antaike research group, however, expressed doubt about any large indium price increases in the near future due to the high number of large-scale producers that are capable of extracting at high recovery rates. Claire Mikolajczak, Director of Metals and Chemicals at Indium Corp., discussed the effect of the flat panel display (FPD) industry on indium demand. Currently accounting for about 56 percent of indium demand, according to Ms. Mikolajczak, the FPD market is the primary driver of indium prices. Moreover, although the LCD growth rate is decreasing, it still remains strong and demand for indium continues to be supported by growth in the photovoltaic cell (PV), CIGS and light-emitting diode (LED) industries. Consequently, some estimates have world demand for indium nearly doubling over the next decade. However, despite strong end-use growth estimates, most in the industry believe production can keep pace over the long-term, leaving only temporary periods of price volatility