Chinese prices for tantalum pentoxide are likely to extend an uptrend starting from mid-February, given firmer tantalite feedstock costs and stronger demand potential, according to market participants.

Argus last assessed prices for 99.5pc grade tantalum pentoxide at 1,790-1,810 yuan/kg ($246-248/kg) on 8 April, up by Yn215/kg or 14pc during the last two months. There were higher offers and concluded prices such as Yn1,840-1,860/kg since late last week, which is expected to shore up market sentiment this week.

"There has been 80t of potassium fluotantalate (K2TaF7) concluded at Yn1,045-1,050/kg recently," a market participant told Argus. These deal prices are higher than the Yn1,010-1,030/kg done last month.

"We are offering Yn1050/kg for K2TaF7, but have not concluded a deal yet," said a source at a south China-based smelter. Other smelters also reported prices concluded in a range of Yn1,040-1,050/kg while waiting for more confirmed deals.

K2TaF7 is a key feedstock in the production of tantalum metal and powders, and its price changes typically reflect the price trends for tantalum pentoxide.

Rising tantalite costs

Argus-assessed prices for tantalite has been on an upward trajectory since late January, when supply from Africa tightened after the escalation of the military conflict between the Democratic Republic of Congo (DRC) and the M23 military group. Prices for 25pc tantalite were last assessed at $98-105/lb on 10 April, rising by $24/lb or 31pc over the past three months, hitting the highest over the past year.

Prices in central Africa have remained lower than prices for non-central African supplies, with offers for Rwandan material at $100/lb or below, while offers for non-central African material were upwards of $100/lb. Conflict in the DRC and concerns around traceability continue to drive demand for non-central African material. Downstream buyers in the electronics industry have required that material not be from the DRC or Rwanda because of the military conflict, but non-central Africa supply is limited and is offered at higher prices.

The military conflict in DRC has continued, with at least 52 people dead on 13 April when the M23 attacked the DRC's northern province Kivu. The DRC and M23 conducted peace talks on 9 April in Qatar, but no agreement has been reached up to now. The continued military conflict is likely to further tighten tantalite supply and prevent its prices from falling in the near term, according to market participants.

Tantalite supplies offered by the M23 group are available at lower prices such as $90-94/lb recently, but few Chinese smelters are considering buying them owing to concerns about traceability problems, smelter sources told Argus.

DRC and Rwanda are major tantalite suppliers to Chinese smelters, as China has limited domestic tantalite resources, with only around 1,000 t/yr of tantalite production in the east Jiangxi province.

Demand potential

Growing artificial intelligence (AI) and chip developments in China are expected to support tantalum demand, as tantalum capacitors and alloys are key raw materials in the two industries.

Increasing military expenditures by national governments are also boosting demand for tantalum, which is a key feedstock in military products such as missiles and bullets.

The US' cumulative 45pc tariffs on Chinese unwrought tantalum has weighed on overseas demand, which typically consumes half of Chinese tantalum supply. US consumers are still operating from stocks and monitoring further development. There have been limited shipments from China since last August, after US buyers made a flurry of purchases last July before the 25pc Section 301 tariff imposed by the former president Joe Biden went into effect.

The US imported 99t of unwrought tantalum in July, maintaining 14-25t of monthly imports since then, according to GTT data.