Feb 1 2011
The Indium market saw fundamentals begin to improve in early 2010 with average annual increase in indium demand projected to increase by about 16% from 2010 through 2013.
As demand recovers from the downturn in 2009, the focus of the market will switch to the supply side and where new production will come from in order to supply the rising consumption. Existing primary production capacity is significantly above current output so there is some flexibility to increase production at existing operations. In addition, it is possible that capacity in China, which accounts for just over 50% of global output, is higher than estimated giving further room for increased production.
Indium is a critical raw material for a number of developing information technology markets, although the most important is that for flat panel displays. Thin transparent films of indium oxide doped with tin (ITO) conduct electricity. These ITO films are central to a number of display technologies, notably liquid crystal displays and plasma displays. Demand for these flat panel displays has remained particularly strong in the computer monitor and television markets.
Flat panel displays, in addition to their predominant use in increasingly larger televisions, both LCD and PDP, have also found further widespread use in items such as calculators, watches, household goods, mobile phones, and GPS navigation systems. Furthermore, technological innovations in computers, including notebooks, and mini-notes have expanded the demand for flat panel displays in the computer end-use sector. However,use of flat panel displays is not limited to personal consumer applications. Non-consumer use in professional displays, classified as Digital Signage Displays, continues to increase.
This growth in indium demand has prompted a significant increase in recycling since the early 2000s. By 2006, it was estimated that secondary production had surpassed primary production of indium. At least 22 companies worldwide were reported to be recycling indium in 2009/10. The Japanese electronics industry generates a considerable amount of indium scrap, principally in the form of spent ITO sputtering targets, which is then recovered. Japanese indium recycling capacity is estimated to be approximately 300tpy. Most of the recycled indium is reused in the form of ITO.
Whilst, the use of ITO in LCDs will remain the major market for indium and will continue to drive growth in indium demand. PVs for solar applications are a newer and perhaps faster growing application, but there remain significant questions over growth rates and also the technologies involved. Forecasts produced by AIM Specialty Materials in 2010 give a growth rate for global primary indium demand of over 15%py between 2009 and 2013. Consumption of indium in ITO applications is expected to grow at 17%py, while solar applications for indium could increase at nearly 40%py, albeit from a much smaller base level. Even if solar applications were to be removed from the forecasts due to the uncertainty surrounding them, demand for primary indium would still be forecast to grow at around 13%py.
Indium prices have shown considerable instability over the past three decades, with cycles of rapid increases followed by periods of steady decline. The tightness in the market that began in late 2002 remained in 2003 pushing prices to US$330/kg in December 2003, tripling the prices quoted at the end of 2002. The price rise continued through 2004 and early 2005, reaching US$1,063/kg in March and April 2005. As indium prices spiked on increasing demand in the electronics sector (flat screen television and computer monitors), some analysts indicated that a contributing factor in the rise was the falling prices for televisions, generating greater consumer demand. In 2004, for the first time, China's production of LCD units surpassed production of cathode ray tube (CRT) units.
Indium prices were rather volatile in the remainder of 2005 and into 2006, but from the end of 2006 onwards the general trend in prices was downwards as supply caught up with the growing demand for indium. Prices rallied in mid 2008 due to strong demand, but the decline in consumption due to the recession in 2009 knocked prices back to levels last seen in early 2004.
Indium prices surged upward in early 2010, buoyed by purchases from Japanese producers of LCDs who appeared to have completed a long period of de-stocking and were beginning to rebuild inventories. Prices rose to a high of US$630/kg in May 2010 and stabilised at around US$550-570/kg between June and October. A thin market in November led to a slight drop in prices and a wide trading range between US$505 and US$590/kg in November 2010, but there was evidence of renewed interest in indium in December and prices were beginning to firm slightly.
Prices for indium correlate relatively closely with demand, particularly in recent years. In general, prices have tended to lead changes in demand as the market anticipates periods of tightness in supply, although prices have slightly lagged behind the most recent upturn in demand in 2010. This may be due to a period of destocking by consumers.
Indium demand is forecast to increase quite strongly at over 15%py to 2013 and it appears that production of indium, both primary and secondary, may struggle to keep pace. In this scenario, Roskill expects that prices for indium will follow demand trends and could reach an average of around US$850/kg by 2013. Further forward, supply of indium will have had time to catch up to demand and, although consumption is forecast to continue to rise, prices may stabilise.