Metal Bulletin assessed indium prices at $345-370 per kg on Friday April 13, unchanged from the previous assessment and up from $250-270 per kg at the beginning of this year.

The Kunming, China-based bourse was initially a boon to China’s domestic market, providing another outlet for producers to sell their material, and giving a group of new investors the opportunity to step into the often-complicated financial markets.

However, cracks began to show at the end of 2014, with some investors becoming wary as metal stocks continued to pile up thanks to new production coming on to feed demand for the exchange’s products. As sentiment soured, the exchange found itself exposed to metals prices that were continuously falling, while also being accused of failing to pay suppliers.

The bourse was shut down following investors’ protests, the arrest of the chairman and an investigation into the exchange’s allegedly fraudulent activity, but the question of just how the investors will be paid back looms over the market - with the collateral still sitting in government-controlled sheds.

The stocks for some metals are vast. Indium is the poster child, with 3,629 tonnes - or six years’ worth of metal - claimed to be in sheds. Other metals on the exchange are also in huge surplus; for China, there is around two years’ worth of bismuth supply held and two-months of antimony output, while selenium volumes are significant.

According to Vareha-Walsh, with the fate of Fanya stocks appearing unresolved, progress obscure and minimal information communicated in more than two years, the question remains: Are the quantities claimed to be in the bourse’s sheds real?

“Will the government take advantage of the current market price? If they do not, does that tell us something?” she added.

Having lacked momentum since the collapse of Fanya Metal Exchange in late 2015, indium has staged a remarkable turnaround in the past few months.
Indium prices started 2017 at $190-230 per kg. Spot activity had been subdued for most of last year, with prices falling to their lowest in August to $180-200 per kg, according to Metal Bulletin’s historical data.

But prices started to creep up at the start of October last year, propelled by tighter supply of crude indium - the raw material for ingot – and have been rising since the beginning of this year.

Still, prices at these levels are comparatively cheap, market participants noted. Indium reached levels above $1,000 per kg in 2005 before the global financial crisis pressured prices down by around 80%.

Despite the continued rise in indium prices since late last year, there has been no real increase in demand from primary users – indium tin oxide (ITO) makers, Vareha-Walsh said.

Indium is mainly consumed in the form of ITO, which is used in liquid-crystal display (LCD) screens for flat-panel devices - such as mobile phones, computers and televisions - and in solder, alloys, electrical components and semiconductors.

Compound annual growth rate (CAGR) for global ITO will increase by 5.5% by 2019, she said, with growth coming primarily from China and South Korea.
The main growth drivers for indium demand come from larger screen sizes, television shipments, small moves to organic light-emitting diode (OLED), growth in quantum dots and developed world deployment of 5G, Vareha-Walsh explained.

“The caveat is, as price of indium increases, so do research and development efforts by display companies to use thinner coatings or alternatives,” she said.

Still, ITO alternatives have been met with limited adoption in the display industry, Vareha-Walsh said. Alternative transparent conductors such as silver nanowires, carbon nanotubes, graphene, and metal mesh grids will eventually find their niche application, but it won’t be in the nontouch display back panel anytime soon.

“None of these alternatives is a ‘drop-in’ replacement for the entrenched and established ITO infrastructure and 30-year processing ‘know how’ of ITO,” she said.

“Closed-loop ITO target recycling promotes responsible use of indium and further extends value and efficiencies to our display customers, making it hard for these alternative technologies to find a competitive entry point,” she argued.

“While Indium Corporation closely monitors alternative transparent conductor technologies, near-term opportunities are limited. However, with the increase in the recent indium prices, it is expected to refocus on these alternatives,” Vareha-Walsh said.

Meanwhile, supply disruptions will continue to be the key driver for indium price moves, market participants who gathered in Montreal for the conference agreed. The crackdown on pollution in China has prevented more than 1,000 zinc mines across the country from ramping up production since last year. Indium is recovered as a by-product of lead and zinc smelting.

One Western supplier with production issues is now back in to full supply, but another Western supplier reduced volume by 25 tonnes this year, Vareha-Walsh noted. And no extra material is available from Western suppliers except for traders, who are getting material from China, she said.

“Tight raw material availability has influenced and reduced crude indium production. At the same time, environmental requirements and costs of compliance increased dramatically,” she said.

The United States Geological Survey (USGS) estimated global production of indium in 2017 at 720 tonnes, including 310 tonnes from China, up 10 tonnes from 2016.

Future supply will increase by 90 tonnes, to 810 tonnes by 2019, according to the USGS. The incremental production will include around 30 tonnes from Western suppliers in 2018 and around 30 tonnes from Chinese suppliers in 2018 and 60 tonnes in 2019.

The USGS also forecast new interest from various mines whereby indium is a by-product, Vareha-Walsh added.

Assuming there are no major trade changes, future demand for indium can be met by reduction in coating thickness, material alternatives or quasi alternatives, by economically feasible technology to recover the current end of life ITO flat panel, the release of Fanya material or new mines tapping their indium by-product, she said.

“However, [the] indium price will have a ceiling... Growth in the flat-panel displays will be met, but will be met with pockets of price volatility - as history has shown us,” Vareha-Walsh said.