Virus thwarts expected tantalum price recovery
The expected trajectory of the global tantalum price recovery was interrupted early this year as a slowdown in demand and consumption offset the effect of supply disruptions and low inventory levels, an Argus analysis shows.
Prices for tantalite with 25pc Ta2O5 content, a main source of tantalum, rebounded from historical lows in the middle of last year, rising by 5pc since the start of this year as the inventory overhang started to ease. Tantalum is a critical material used high-performance capacitors, super-alloys and other applications in the aerospace, military and consumer electronics industries.
Argus-assessed prices for tantalite held stable in the final full week of March, at $61.50-63.50/lb cif main port, recovering from a nine-year low of $52-55/lb reached in early August last year, which was the lowest since the assessment of $50-54/lb on 14 June 2010.
Many consumers re-entered the spot market for purchasing material in China, Europe and the US. A trading firm sold multiple lots of material to Chinese refineries on the spot market at $63/lb, while another trading company sold containers of tantalite with higher Ta2O5 content (about 40pc) and high niobium content at a premium to the standard grade, at $68/lb, last week to consumers.
But the unexpected and widespread coronavirus pandemic weighed on spot demand, with buyers awaiting clear directions on supply and demand fundamentals.
Before the rapid escalation of the pandemic globally, the tantalum market was poised for a price recovery after lower production and dwindling inventory stocks began to influence prices. Market participants expected prices to rise to $70-75/lb in the second quarter of this year, a price level that was likely to incentivise and boost production in Africa.
As the virus pressure eases in China, buying interest has grown in the Asia-Pacific region, which sent domestic prices higher. Prices for 99.5pc tantalum pentoxide rose on 24 March by nearly 3pc since the start of this year to 1,300-1,360 yuan/kg ex works China.
Supply pressures amid muted demand
Production restrictions and disruptions to transportation also stemming from the virus spread in Latin America and Africa are likely to increase supply pressures in the market in the near term.
Brazil's Mineracao Taboca outlined plans to place its Pitinga mine and tantalum/niobium smelter on care and maintenance for 15 days, starting from 1 April. Other producers and smelters also are likely to restrict production from the region.
AMG's tantalum-niobium operation, Mibra, which processes 300,000 lb/yr of tantalum, is running as normal, the company told Argus. Production restarted in February after a closure lasting more than two months.
But in Brazil, as elsewhere, there has been a drop in artisanal mine production, a trend already resulting from lower prices. And tougher precautionary measures mean logistics are under even greater pressure, with countries prioritising transport of essential goods only.
Among producing countries, Rwanda last week implemented the first national lockdown in Africa, halting production and customs clearance for minerals out of the country, although it has allowed transit from neighbouring countries.
The main producing country, the Democratic Republic of Congo, also closed its borders, but production continues at major operations. Producers are struggling to secure financing, with companies also facing pressure over transport logistics.
This was followed by Nigeria locking down its major cities on 30 March.
Meanwhile, a number of Chinese customers have been in the market for raw materials, along with customers in the wider Asia-Pacific and North America regions, but with a limited impact on prices, which so far have stayed under $64/lb Ta2O5 in the market. But sales prices have been nearing these levels in recent days, with offers moving higher on mounting concerns over the ability to transport material overland and for material that is not already seaborne.
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