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Indium Price Soars As Demand For Displays Continues To Grow

Demand for InP-based devices may just be crawling out of an extended slump, but its main raw material, indium, is highly sought after - it is currently trading at its highest price for the last 60 years. Thomas Jansseune looks at the market forces that could be problematic for InP manufacturers.


Indium and InP, although closely related to each other, are going in different directions. While InP chip makers can only dream of filling their existing manufacturing capacity, firms are now concerned about whether they will be able to get hold of enough indium. This perceived shortage has led to a spectacular increase in the cost of the material over the last three years, with prices rocketing 10-fold since 2003 and now standing at their highest level since the Second World War.


The reason for this soaring price is that some non-InP applications of indium have recently witnessed stellar growth. On top of that, the future supply of indium is unclear, with production of the raw material dropping by more than 12% last year.

Rapid growth in displays


The use of indium in coatings, mainly indium tin oxide (ITO), has increased steadily and it now accounts for 70% of total indium consumption, up from 45% a few years ago (see "The indium market and compound semiconductors" Compound Semiconductor September 2003 p33). This demand is linked closely to the strong growth that has been shown by flat-panel displays, and by LCDs in particular.


The flat-panel-display market is expected to continue growing until at least 2008, although perhaps at a slower pace than in the past couple of years. Because of this, most ITO producers have also announced capacity increases: Umicore doubled its capacity in 2004; Mitsui and Nikko will follow in 2005 or 2006; and Tosoh is looking at hiking its capacity, provided that it can secure enough indium. The use of ITO coatings in architectural glass, on the other hand, has decreased considerably because of the increasing price of indium.


Semiconductors and electrical components account for a stable 12% of all indium consumption, and demand from InP device makers is not expected to change considerably over the next few years. Strategy Analytics forecasts an annual growth rate of 6% between 2003 and 2008, but recent statistics from Japan show that indium use in compound semiconductors stagnated between 2002 and 2005 at 7 MT/year.



The use of indium in solders and alloys is thought to have dropped to just 12% of all indium consumption, mainly because different metals are now used. Other applications of indium that may take a more prominent role in the future include thin-film solar cells, where a pressing shortage of solar-grade silicon may allow copper indium diselenide solar cells to break into the market.


According to the US Geological Survey, total indium production dropped from 370 MT/year in 2003 to 325 MT/year in 2004 (figure 2). A number of indium mining activities have closed in recent years. In France, Metaleurop ceased production entirely and in China several mining and smelting operations were halted because of concerns over safety and the effect of indium extraction on the local environment. It does seem, however, that Chinese output in 2004 was similar to that of 2003, probably because the high price of indium made it economical to recover every scrap of the metal that was available.


Indium is a by-product of zinc, tin and lead production, so increasing output is not simply a case of extra mining. Rather, it involves investment in the refining equipment that is able to extract increasingly small concentrations of indium from other material streams. This requires time and money.



Business closures and start-ups have been announced for the near future. Nippon Mining in Japan will close its exhausted Tohoya mine in 2006. This is likely to remove up to 30 MT/year from the supply chain and cut Japanese production by between one-third and one-half. In Canada, Teck Cominco will keep its 2005 output stable at 40 MT. New indium production has been announced in China and South Korea, where Korea Zinc will start recovering as much as 34 MT/year or more of indium from its zinc concentrates.


Umicore is the only established, fully integrated ITO producer. Thanks to output from its precious-metals refining plant in Belgium, it is able to produce its own indium products.


One important point to consider is that a large amount of secondary indium can be recovered via recycling. Application of ITO coatings is a wasteful process and only around 20-30% of the material actually ends up on the substrate. Dowa Mining, Nippon Mining and Umicore all recycle ITO.
With indium demand remaining strong and supply of the material uncertain, its value is likely to remain high, although its price may also be subject to the activity of metal traders. However, the cost of indium has created a base for more investment in the recycling and recovery of indium. This should,ultimately, lead to an equilibrium between supply and demand, but not in the short term.


The business closures and start-ups that have been announced could trigger a shift in the supply base. Integrated manufacturers of indium products, which have indium production and recycling in house, will be in a winning position. For whatever application, be it InP chips or ITO coatings, control over the supply chain will be crucial.

Acknowledgments
Thanks to Yves Simons (general manager, Umicore Indium Products) and Paul Mijlemans (business line manager, Umicore Substrates) for suggestions and comments.

Further reading
M W George Indium 2004 United States Geological Survey.

Rare Metal News 1 March 2005 (Japanese).

Metal Bulletin 5 Nov. 2004; 3 March 2005.



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