Renewed activity in Europe's hafnium spot market this month signals that underlying demand remains firm, and there may be potential for prices to hit fresh highs in the second half of 2023, according to market participants.
Prices for 99pc grade hafnium rose yesterday for a second consecutive week to $6,000-6,400/kg duty unpaid Rotterdam — up by more than 5pc from $5,700-6,000/kg a week earlier and their highest level since Argus' assessment was launched in 2015. For context, prices stood at just over $1,500/kg in-warehouse Rotterdam a year ago, starting to surge in the second half of 2022 as strong demand collided with a constrained supply base.
A sale to an end-user was noted at $6,400/kg, while another deal was being finalised late yesterday at around $6,600/kg. It is unclear whether his upper price level is repeatable in the wider market, but several sources expect the market to rise further — potentially hitting above $7,000/kg soon.
"There is still demand coming up this year," a trader said. "In fact, there is more demand than people think," he said, adding that he received spot enquiries this week for the third and second quarter of the year totalling around 250kg.
While shipping disruptions have eased globally and specifically in Europe, delays from China — which is a key supplier — are still very much present, compounding the situation. "I don't see any units coming from China, especially for crystal bars," the same trader said.
Market sources told Argus that material that was expected to be shipped from Chinese ports in May is now expected in July instead, and in some cases later than that, suppliers informed them.
France continues to be sold out according to sources while there is minimal spare material coming from the US. On the consumer side, there is healthy demand from superalloys and electronics. That said, there is not necessarily the same level of [urgency] or even panic compared with late last year. The overall sentiment is also not as unnerved.
This is because there are some stocks on the market that consumers bought in advance. "There are a lot of sales to end-users at high prices but there also seems to be a number of people still working with cheaper material — it may be off-spec or old stock," a second trader said.
More traders are now entering the hafnium market, sources said, attracted by the volatility and record high prices. This is also bringing more material into the market, but sometimes it is low purity. "I have been offered but it is low-grade and is not crystal bar, I'm not even convinced that you can use it without fully processing it," the first trader said.
A third trader did not see that much interest from consumers now but did not rule out a supply crunch exacerbated earlier next year. "I think the difficult time will be towards the end of the year and securing requirements for 2024 and beyond. Right now many consumers have their requirements covered and I would say that spot enquiries are thin on the ground".
Supply squeeze fuels concerns
The global hafnium shortage has become a hot topic in the industry and was one the main areas of discussion at the MMTA's International Minor Metals Conference in North Carolina last month. The structural shortage is seen as "inevitable" because the emergence of new technologies and applications — from electronics to space — has expanded the demand base for the long term.
"Hafnium demand has been disrupted by the semiconductor industry… and the situation could last for several years despite electronics softness in 2023," OnG Commodities founder Andrew Matheson said at the conference. He added that there is scope for Chinese supply to ease the pressure if it does not relocate its zirconium production, from which hafnium is a by-product.
Similarly, at the Critical Metals and Minerals Conference in London in March, delegates raised concerns about the exclusion of hafnium from the UK's updated list of critical materials. "If hafnium, a metal coming from a handful of sources used in various key and high-tech industries, is not an example of critical material I don't know what it is," a supplier said.
