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Key takeaways:
Seemingly perennial minor metals trading houses are exploring new products and approaches in response to their legacy markets being upended by policy disturbances and the realignment of key supply chains.
China’s export controls on metals such as gallium, bismuth and germanium have prompted a reconsideration of how their markets work. Under the export control system, a final end user needs to be disclosed, meaning that traders are unable to build unassigned stocks from Chinese sources.
Disrupted supply for some export-controlled metals has also seen some market participants, whose activities extend into downstream processing, pull back from pure trading in some markets and instead, prioritizing downstream chemicals and compounds.
“Just as a cookie company wouldn’t sell flour, I will no longer sell standard metal,” a Western market participant said of one export-controlled metal.
And demand shifts related to geopolitical tensions in markets with military or aerospace applications, have led to pressure in markets where supply is often firmly inelastic.
Those developments heaped pressure on several minor metal markets and the traders active in them, leading some traders to proclaim that this is the time for them to “prove [their] value.”
Some are focusing on the more niche sides of their books, seemingly reaping rewards from their long involvement and strong position in newly booming markets, such as rhenium, where well-established trade flows have been jolted by strong demand and geopolitical anxiety.
Rhenium is widely used in the aerospace sector as a key input in high-performance, high-temperature superalloys for jet engine components.
Among the trading houses apparently doing well in this new environment is the London-headquartered family-run and owned Lipmann Walton, which describes itself as “the sweet shop for minor metals” for its ability to source, stock and sell a wide range of rather niche minor metals.
Founder Anthony Lipmann was well-known for his consistent interest in rhenium. He began to stock and trade it when this material moved for the first time from East to West following the break-up of the Soviet Union in the early 1990s, at a time when few were interested in such a small market. He retired in 2020, with his daughter, Suzannah Lipmann, having taken over as managing director two years earlier.
Speaking to Fastmarkets in October, she emphasised the importance of consistently servicing customers, sharing market expertise, and of the need for persistence, even when there is apparently little going on.
“For such a small market [such as rhenium], someone needs to care for it, as we do, even when the market is quiet,” she said. “Had aero-engine producers and other end users continued to take an interest in the period when prices were virtually below the cost of production, they would not be as exposed as they find themselves today.”
While rhenium prices have climbed significantly over the past year, and many more market participants have become involved, Lipmann Walton’s steady approach, guided by applications and serving customer needs, remains its core strength, according to Lipmann.
Fastmarkets’ assessed price for rhenium metal pellets 99.9% Re min, in-whs dup, Rotterdam, was $1,349-1,479 per lb on October 17, up 4.51% on the $1,300-1,406 per lb that was assessed on October 3. That is up 61% on the $800-953 per lb that was assessed in the first session of this year, on January 10.
“We are as interested in rhenium today, as when the market was flat and are well aware that ‘we have been here before’. It is our role, as a merchant, to be able to stock and trade in all market conditions,” she said.
“That is the risk that we accept when we call ourselves the sweet shop – when a market is dead, we still weather it,” Lipmann said.
A willingness to absorb risk is a common thread for many of the traders that seem to have found success in the new environment.
Germany-headquartered Tradium has become a vastly more relevant player in the ex-China gallium and germanium spot markets in the wake of the export controls.
“This situation [provides] opportunities to redefine the role of the pure traders for those companies that take bold and creative moves to redefine their business models,” Tradium’s senior manager of minor metals and rare earths, Jan Giese, told Fastmarkets.
Tradium’s business model has historically relied on Chinese sources. But more recently, with the introduction of China’s export controls on several key minor metals, the company have also sought to expand its sourcing options, especially where liquidity becomes tight due to regional supply shortages.
“With drastically reducing liquidity in the market [requires] taking calculated risks on materials and pricing, but also holding detailed conversations with our customers about the market situation,” Giese said.
Some trading houses have expanded beyond the minor metals spot markets, including large London-based trading house Wogen, which has signed a binding offtake agreement to source antimony from an antimony-gold miner in Australia.
Others are looking at new markets, particularly those where established tradeflows have been jolted by geopolitical shocks, including one trading house, which told Fastmarkets in October that it was was exploring becoming involved in the bismuth oxide market, after China’s export controls on the metal pushed some consumers to substitute oxide for metal where possible.
Fastmarkets’ pricing shows a big discount for bismuth oxide (which is not officially subject to China’s export controls) in Europe, when compared with bismuth metal (which is).
Fastmarkets’ price assessment for bismuth 99.99% Bi min, in-whs Rotterdam was $17-18 per lb on October 29, flat from the previous session, while the price assessment for bismuth oxide, cif Rotterdam was just $7.94-8.85 per lb on October 24, also flat from the previous session.
Larger metal companies, particularly base metals miners and refineries also appear to have been paying more attention to the minor metals recently.
In his address on the first day of LME Week on October 13, Trafigura chief executive officer Richard Holtum addressed the issue of minor metals such as antimony, germanium and gallium and emphasised the importance of base metals refining capacity in producing them.
Meanwhile, major copper and zinc producer Teck joined the broad-church Minor Metals Trade Association this year and is also in talks to supply key defence metals – including germanium, antimony and gallium – to the US and Canada, according to reports in the Financial Times.
And base metals giants such as Rio Tinto, Metlen and Alcoa are all also involved in projects to produce gallium – for which production has long been dominated by China – although several are doing so via partnerships with traders or consumers of the metal.
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