Limited spot availability, increased demand from main downstream sectors and a strong international market are likely to bolster China's hafnium prices in the coming weeks, market participants told Argus.
Prices for 99.9pc hafnium crystal bar with 0.5pc zirconium rose to 24,000-25,000 yuan/kg ($3,325-3,467/kg) on 19 July, up by 32pc from the mid-point of Yn18,000-19,000/kg ex-works on 9 February, according to market participants.
Demand from consumers in and outside China in the aerospace, nuclear, industrial gas turbine and semiconductor sectors has increased. Most major hafnium producers are also operating at low run rates owing to a shortage of hafnium oxide feedstock supplies.
"We plan to restart production in August after a suspension since the start of April caused by environmental inspections," a Jiangxi-based crystal bar producer told Argus, adding that it has received many buying enquiries from the spot market, but it is holding limited inventories to supply spot buyers. The producer will run at lower capacity rates in August with an output of 100-200 kg/month because of the supply shortage for hafnium oxide feedstock.
Crystal bar producers have found it hard to secure ample hafnium oxide feedstock supplies, as some oxide producers have withdrawn oxide from sales while waiting for even higher prices in coming weeks, driven by lower spot inventories and strong demand from semiconductor chip manufacturers. Hafnium oxide can also be used to produce hafnium tetrachloride, which is used in manufacturing semiconductor chips.
"This has led most oxide producers to produce more hafnium tetrachloride with large volumes to supply the chip industry," a Liaoning-based hafnium tetrachloride producer told Argus.
A Jiangxi-based oxide producer has stopped accepting new orders until December, while focusing on fulfilling existing contracts. It expects oxide supplies will continue to tighten in the coming weeks as many oxide producers have delayed their deliveries to push up prices to secure higher profits.
"Higher international prices have also prompted domestic bar producers to raise offer prices in the past few months, despite low trading volumes as domestic buyers have yet to accept the higher prices," a Jiangsu-based bar producer said. There are only 2-3 bar producers that are exporting hafnium from China, the producer added, as doing so requires a permit from the country's ministry of commerce and international buyers must provide an end-use statement.
China exported 10,683kg of unwrought hafnium metal, scrap and powder in the first five months of 2023, according to customs data. China only started to publish separate export data for hafnium from this year.
International hafnium prices have remained on an upward trajectory since last September in response to firm demand from the aerospace, industrial gas turbine and semiconductor industries, as well as limited spot supplies.
Argus last assessed prices for 99pc grade hafnium higher at $6,800-7,100/kg duty unpaid Rotterdam on 18 July, up by more than 1.5pc from $6,600-7,100/kg on 20 June, in response to continued tight supplies and firmer demand from the aerospace and military sectors. The current price is the highest since Argus launched this assessment in 2015.
