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Having lacked momentum since the collapse of China’s Fanya Metal Exchange in late 2015, indium has staged a remarkable turnaround in the past few months, attracting the attention of the minor metals industry.
Indium prices started 2017 at $190-230 per kg. Spot activity had been subdued for most of the 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, propelled by tighter supply of crude indium – the raw material for ingot – reaching its year-to-date high of $270-290 per kg at the beginning of November.
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%.
Supporting factors So what caused the sudden about-turn in indium prices? Indium’s output fell remarkably in 2017 because of supply disruptions in zinc mining in China – indium is recovered as a by-product of lead and zinc smelting.
The nationwide crackdown on polluting industries in China prevented more than 1,000 zinc mines across the country from ramping up production in 2017.
China’s indium output dropped by around 20% in 2017 in an annual comparison, according to China Non-ferrous Industry Association (CNIA).
Indium prices in China have also risen. Metal Bulletin’s price assessment for Chinese domestic indium rocketed to more than 1,800 yuan ($272) per kg early in November 2017, its highest since the fallout from the collapse of the Fanya Metal Exchange in 2015.
But indium prices have eventually started to descend because of profit-taking since the start of December.
“We see a few stock holders who lowered their offers to get cash back before the end of the financial year,” a supplier said.
Metal Bulletin assessed indium in-warehouse Rotterdam prices at $245-270 per kg on Friday December 15, unchanged from the previous assessment.
“Prices are now stabilising as time approaches the end of the year,” a producer said. “Many companies are controlling their stock before their financial year-end.”
In-warehouse indium prices in China’s domestic market were assessed by Metal Bulletin on Wednesday December 13 at 1,450-1,520 yuan per kg, down 2% from the previous assessment.
“Crude indium is still tight though as most of the suppliers who stocked some material were already sold out when the price fell,” the supplier said.
“We have not been offering any material for the last few weeks due to low stock,” the producer said. “Strangely, we still get many inquiries, even though in December the market is usually very quiet.”
“I see ITO demand is firm and indium supplies are unstable in the market. I think that prices above $300 still make sense for small quantities,” the producer added.
Most producers outside of China are still sold out, market participants noted, while Chinese producers “are still holding the power and are the only ones able to offer on the spot market,” a trader said.
“I guess most suppliers are out of stock or have very low stock, same as us,” a second supplier said. “For the past few weeks, we had many inquiries that we could not respond to at all. So the spot market should be very quiet for the remainder of [2017].”
Although availability remains limited, demand has little changed over the past few years, market participants noted, and the sustainability of the price rally remains in question.
“I think prices will eventually go back down to their previous levels before the rally,” a second producer said. “I am already seeing offers on the low at $230 and $240.”
As well, unresolved Fanya Metal Exchange stocks continue to hang over the indium market.
There are 3,629.46 tonnes of indium in the exchange’s warehouses, it is claimed, which is about six years of global supply.
“Massive inventories on the Fanya platform are still the biggest concern for the market, haunting it like a ghost,” a market source in China said.