Friday, 02 July 2010
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MINORS LATEST
Gallium price soars, hits highest in two years as supply shrivels

By Martin Hayes - Chief Correspondent, martin@minormetals.com (+44 (0)20 7929 6339)

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London, 02 July 2010 - Spot gallium prices, stagnant for most of the year have, have soared over the last week to their highest for two years amid spot supply tightness, traders said.

The metal was quoted at $500/550 per kilogram, having risen from levels around $300/375 that have prevailed throughout 2010 and for most of 2009.

"You could buy it quite easily a month ago - now you find the Chinese won't offer below $565 and that's for shipment," a trader said. "The Russians are sold out and although there is stock in Rotterdam it has been held for years - [holders] are not in any rush to let it go."

As a metal used in high-tech applications, gallium is vulnerable to any spike in demand as has quickly been evident from the light-emitting diode (LED) sector. Gallium arsenide and gallium nitride usage in electronic components is also ticking over.

In a small market, with modest trader inventory, any upturn in demand will have an explosive impact if the supply response is tardy.

In 2009, world primary production was 78 tonnes, according to USGS estimates, down 30 percent from 2008's 111 tonnes. China, Germany, Kazakhstan and Ukraine were the leading producers, while countries with smaller output were Hungary, Japan, Russia, and Slovakia.

Global refined gallium production was estimated to be about 118 tonnes, including scrap refining. China, Japan, and the US were the principal producers of refined metal. Last year, global primary gallium production capacity was estimated to be 184 tonnes, refinery capacity 167 tonnes and recycling capacity was 78 tonnes, so there is scope for production to be raised.

But prices have considerable upside potential. The recent peak in 2007 was above $700 but the market hit all-time highs of $2,500 per kg in 2001 when gallium arsenide demand was boosted by demand from new-generation mobile phones.

(Editing by Mark Shaw)
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