Hafnium rally accelerates as supply crunch tightens

Global hafnium prices continue to rally amid a shortage of spot availability and replacement supply coupled with increased demand.

European prices for 99pc-grade hafnium with 1pc maximum zirconium rose to a more than two-year high of $875-925/kg duty unpaid Rotterdam in early November, their highest level since prices were assessed at the same level on 17 April 2019, according to Argus data.

Multiple sellers are now unwilling to sell commercial volumes of hafnium with 0.5pc zirconium content for less than $950/kg, while sales for smaller volumes were quoted at about $1,000/kg in Rotterdam, market sources said. Deals for volumes of 100-500kg were recently concluded in a range of $950-1,050/kg in Europe.

"Supply is not flexible. Most producers are sold out and end-user demand is definitely active," a trading firm in Europe said this week.

Although some market participants expect trading companies to withhold stocks to meet demand, another supplier said finding "replacement material is difficult and there is no horizon as to when to buy more".

He also warned of the uncertainty over the longevity of price spikes amid low liquidity. Typically, hafnium volumes are locked into long-term contracts with consumers, which could dent spot liquidity.

The US market is showing similar price strength as producers face supply chain constraints, with sellers continuing to test higher offers.

A slight deficit in the hafnium scrap availability "imbalanced" the market, one market participant said. Hafnium scrap is used to produce hafnium tetrachloride, a key compound in the production of crystal bar. Strong and steady demand from the industrial gas turbine and electronics sectors absorbed most of the hafnium compounds last year, during an unprecedented period of low demand from aerospace, the main hafnium-consuming industry.

And with increasing nuclear plants under construction, there is likely to be a boost in demand for metals such as hafnium and zirconium sponge, particularly from the Asia-Pacific region.

At the same time, major producers have committed to supplying significant volumes under long-term contracts, leaving less material available for extra spot deals, market participants said.

Bids of $700/kg for off-specification hafnium — typically containing certain impurities and of a varied form that may need further processing — were declined in the past week and sales were concluded at at least $100/kg higher, indicating tight availability and higher demand, a trading firm said.

By Anuradha Ramanathan