High-tech metals lose allure as demand for electronics falls
Tuesday, July 31, 2001
By ALLAN ROBINSON
MINING REPORTER
Globe & Mail - Report on Business
The market for high-tech metals has fallen dramatically as the technology boom has gone bust and the world's economies have slowed.
The end of last year's mania in the electronics industry has burst price bubbles for palladium, which is trading at less than half the levels it reached early this year, and tantalum, which is at a fraction of what it was late last year.
Both metals are used in the electronics industry to manufacture capacitors -- critical components that regulate the flow of electricity -- employed in cellphones, computers and pagers.
Palladium and platinum are also used in the automotive sector for the manufacture of catalytic converters, which reduce pollution by filtering car exhaust.
The price of palladium fell $11 (U.S.) an ounce yesterday to $444, continuing a slump that has seen the price fall $99 during the past 10 days. Palladium traded at more than $1,000 an ounce earlier this year, averaging $1,041 during January, according to metalprices.com. It is now trading at its lowest level in about 18 months.
"People are just trying to offload as much palladium as possible and get whatever price they can for it," a metals trader told Reuters News Agency yesterday.
"At virtually every fixing, the price is lower."
The price of palladium is set twice a day by members of the London-based Palladium Fixing Committee.
Tantalum traded at $104 a pound in April -- the latest price available -- down from $443.90 a pound in December, according to statistics provided by the U.S. government's Defense Logistics Agency. Tantalum is sold under long-term contracts between producers and users and there is no open auction market. Public figures are provided by the U.S. agency.
The price of platinum, meanwhile, has fallen to $498 an ounce from $546 in mid-July. In mid-January, it traded at $639.50 an ounce. In addition to industrial uses, platinum is used in jewellery. Traders told Reuters that demand for jewellery in Japan is helping to keep the price of platinum up.
Disruptions in exports from Russia helped to push both platinum and palladium prices to record levels early this year.
"Our forecast is for lower [palladium] prices," said Victor Flores, a mining analyst with HSBC Securities in New York. "It's clear the world is slowing down."
Mr. Flores said that HSBC Securities, in a long-term forecast made when palladium was trading at more than $1,000 an ounce, estimated the metal eventually would trade at $250 an ounce. That's in part because new and expanded palladium mines will add supply from North America and South Africa, he said.
Another factor driving down prices is product substitution. Mr. Flores points to the automotive industry, which is gradually substituting platinum for palladium. The dental market and electronic markets, too, have seen "immediate substitution," he added.
There are plentiful supplies of palladium and platinum, and there are rumours among traders that Japanese users of both metals are selling surplus material, mining trade magazine Metal Bulletin reported last week.
The drop in the price of tantalum is a healthy sign, said Donald Bubar, the president of Toronto-based Avalon Ventures Ltd., which is exploring for tantalum, platinum and palladium and other rare metals, such as lithium, cesium and rubidium.
"The big price move [in tantalum] last year was essentially a short squeeze," he said. "I don't believe that anyone at the time believed those prices were sustainable."
Mr. Bubar said lower tantalum prices in the range of $75 to $125 a pound are better for the industry in the long run. "I think it's a much healthier price. At several hundred dollars a pound, that would just increase [product] substitution," he said.
In addition to capacitors, tantalum is used in superalloys, which go into the manufacture of jet fighters, engines, weapon systems and nuclear reactors. |
