Is This the Big One? Tech Metals Showing Signs of a Turnaround

Monday December 19, 2016 12:06

Ever since their peak period several years ago, prices for technology metals have been flatlining at very low levels. Often, in fact, close to their actual cost of production.

The excess capacity created during the boom years, together with existing inventories, prevented the metals from moving up despite a sharp growth in consumption by the various industries involved in electronics.

But this, it would seem, is now about to change.

“Since the inception of the Tradium metal baskets in August this year, basket prices have mostly developed in a positive manner”, explains Matthias Rueth, President of Tradium, a large technology metals wholesaler and retailer from Frankfurt, Germany. In just four months, their “Electro Mobility” basked went up more than 11% in value (from US$ 23,654 to US$ 26,248), followed by “Green Energy” which grew 10% (from US$ 17,158 to US$ 18,784). The same would be true for their “Aerospace” and “Electronics” basket if they weren’t weighed down by a slightly negative development of Rhenium, a metal customers may remove at their own choosing.

Looking at the winners and losers among individual metals, Gallium leads the charts with a growth of nearly 30% in just four months, followed by Praseodymium (17%) and Terbium (11%). At the end of the list are Rhenium (-4%) and Germanium (-2%), both of which have the potential to follow suit with the other metals.

Three effects contribute to the rise in tech metal prices:

  • The closing of several mines and REE production facilities in China in response to low pricing, environmental concerns and as the result of a crackdown on illegal mining;
  • The announcements of China’s State Reserve Bureau to buy more than of 1,400t of rare earth elements into their national stockpile. Nine metals are affected by this measure: praseodymium, neodymium, europium, dysprosium, erbium, lutetium and yttrium among them.
  • The market shift towards electro-mobility with new product offerings from several manufacturers featuring higher driving ranges at more affordable prices.

The combination of these events would indicate that we are indeed looking at a turnaround of technology metal prices. Be sure to monitor this trend.

To view and customize price charts on many of these metals, please visit the “Strategic Metals” page on the Kitco’s website by clicking here, or by clicking the “Strategic Metals” button under “Favorites” on the Kitco homepage.

By Bodo Albrecht, 
www.bodoalbrecht.com
Follow me on Twitter @BodoAlbrecht