Strategic Metal Report

Germanium Market Update - April 2012

Asianmetal.com's annual Indium and Germanium Forum concluded last week in Kunming, China, with the mood amongst germanium producers and traders much more downbeat compared to a year earlier.

With germanium prices dropping again in early April in the face of slow sales, prices have now shed their increases from late 2010 and early 2011.

However, with germanium prices nearing their 2010 nadir, rumblings continue that major Chinese producers may move to increase offer prices in order to stimulate purchasing.

If this is the case, prices can be expected to move upward in May and June. Otherwise, germanium prices may begin to flat-line. Since 2006, germanium sellers have shown repeated resistance to prices below US$ 1000/kg, indicating that they are closing in on production cost values.

The US, EU and Japan Take China's REE Export Policies to the WTO

In the first WTO case to be filed jointly by the US, EU and Japan, the three industrial powers will argue that China's REE export restrictions are not in accordance with the coutries obligations under its accession to the WTO. 

Following the WTO Dispute Settlement Panel's decision last year regarding Chinese restrictions on numerous other raw materials, including  bauxite, fluorspar, silicon carbide, coke and zinc, which found Chinese export and licensing systems not in compliance with their WTO requirements, many were expecting a complaint regarding REEs to follow.

For more on the WTO and China's raw material export regulations, click here.

For more coverage on the REE WTO complaint:

• BBC News: US, EU and Japan challenge China on rare earths at WTO
• Reuters.com: U.S., EU, Japan take on China at WTO over rare earths
• Bloomberg Editorial: Obama’s Rare-Earths Case With WTO Won’t Ensure Security

Gallium Market Update - March 2012

As gallium prices continue to hover around their lowest level in years, recent reports from China suggest that some factory expansions may be temporarily shelved until prices rebound.

At least one major producer has already opened a second production line - doubling its capacity - in recent months. 

While gallium sales remain fairly strong, spot gallium prices, which have dropped from a high of over US$ 900/kg in mid-2011 to near US$ 400/kg, have fallen in large part due to more mature recovery systems to collect recycleable gallium in Europe and North America and to growing primary production from capacity expansions in Asia.

Image courtesy of Metal-pages.com

Germanium Market Update - February 2012

Germanium prices began falling in late 2011 after months of stagnant demand and increasing inventories. The fall in international prices in November and December preceded any drop in prices from Chinese producers, which led to a temporary divergence in prices that seemed to close leading up to the Chinese Spring Festival.

Although prices are expected to stabilize in Q1, germanium production will exceed demand, which will continue to put downward pressure on prices heading into Q2.  

Antimony Market Update - January 2012

Heading into the Spring Festival holiday, antimony trioxide prices appear to have stabilized around USD 10,000/MT (Sb203 99.65% FOB). But inventories, which have been piling-up due to persisting slow demand, particularly from Europe, are still putting downward pressure on prices.

Many Chinese antimony exporters stopped offering material prior to the holiday, citing government inspections, but efforts to support export prices will not likely lead to higher prices until orders begin increasing.

Image courtesy of Metal-pages.com

Minor Metals Year in Review: 2011

2011 was for the minor metals, like it was for many commodities, a year of two halves. The first few months saw prices rising to near - and sometimes past - their pre-financial crisis levels, as end-users breathed a sigh of relief when the worst of the crisis seemed to have passed. But the euphoria was short-lived.

By June and July, it was becoming evident that the sovereign debt levels in the US and Europe were going to weigh heavily on governments' abilities to continue supporting economic recovery with further fiscal stimulus. Markets and commodity prices stuttered. Copper started to fall from its record levels by the end of July and the industrial minor metals, molybdenum, cobalt, tungsten and manganese, followed.

By September, all eyes had turned east to see whether China could pick-up the slack in demand, as it had two years earlier. But China's hands seemed tied as it continues to try and address inflation and liquidity issues that have stemmed from its 2008 monetary stimulus.

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 2010

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

Looking Back: The Evolution of the Rare Earth Industry (2009-2011)

The precipitous decline of rare earth prices since September seems to, at least temporarily, have put a damper on the hype that had been building over the past few years. The relative calm provides a good opportunity to reflect on the recent evolution of the rare earth element (REE) industry and, as I see it, some prevailing misconceptions that have been driving the industry since 2009.

Background: Enter Investors and the Media

REE's entrance into the investment community's spotlight brought with it previously unthinkable levels of media coverage. What was once a colloquial industry quickly became the topic for resource investors, as the drastic cuts to China's rare earth export quotas caught the attention of not only business reports, but also political analysts and technology reports. Even National Geographic couldn't turn away from the story of REEs, which formed a 'perfect storm' of high trending news topics: geopolitical confrontation, China, national defense and green technologies, energy dependency and, of course, investment opportunities.

Chart c/o Metal-Pages.com

Unfortunately, the sudden influx of interest in REEs created a void of persons with expertise in the elements themselves. Global production having, in effect, completely moved to China during the three decades prior, few in the West were knowledgeable of both the production (supply) and end-uses (demand) to effectively comment on and analyze the developments. The media was left wonting for information and, so, turned to any individuals and companies with involvement in the industry; traders, investors and exploration and development companies.

The major problem with this was that the vast majority of players within these groups had vested interests in promoting the demand potential for REEs, as well as the supply side risks of Chinese REEs. There was - and continues to be - little incentive to dispel sensational reports that China will cut off all supply of REEs to the West or that REEs are the battlefield for a geopolitical war over green technologies.  

The herd of investors and commentators has grown daily over the past two years, while the few balanced analyses produced during this time have been lost amongst more alluring headlines calling for REE stockpiles, national REE 'strategies', subsidies for domestic production and REE self-sufficiency; common nationalistic responses that have been seen in other resource industries suffering from supply shocks, but which have been proven more or less ineffective in actually impacting long-term supply constraints.

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