TECH & ELECTRONICS: Track the downstream impact of novel coronavirus

Since the outbreak gathered pace in January 2020, companies including Apple and Samsung have closed plants, shifted production, and in some cases, revised revenue forecasts. The far-reaching effects of the virus on the global economy also mean the demand profile for some minor metals is changing.

Here, Fastmarkets summarizes key company announcements that affect the technology supply chain, and new measures to combat the effects of the virus, as well as their impact on the high-tech raw materials markets.

This article will be updated when new announcements are made, and new developments take place.

Impact on raw materials:

Prior to the virus outbreak, industry sources expected a 4-5% increase in cobalt demand in China in 2020 from the smartphone sector, due to the anticipated take-off of the fifth generation (5G) network.

Now, market participants have told Fastmarkets the best scenario is the smartphone sector can maintain the same demand for cobalt as it did last year.

Prices for cobalt tetroxide, which is used in the production of lithium cobalt oxide batteries used in consumer electronics, initially found support from post-Lunar New Year restocking, but have since come weighed down by sales pressure and a weakening demand outlook.

Fastmarkets’ price assessment for cobalt tetroxide, 72.6% Co min, delivered China stood at 210,000-220,000 yuan ($29,600-31,000) per tonne at the beginning of March, falling to 190,000-195,000 yuan per tonne by March 20, a drop of 10.5%.

Cobalt hydroxide payables have performed similarly, reaching highs of 67-69.5% of the metal price in late February. Fastmarkets’ cobalt hydroxide payable indicator, min 30% Co, cif China stood at 65-68% of the standard-grade cobalt price (low-end), as of March 18.

Germanium has shown an increase in demand in the wake of the coronavirus outbreak, mainly for use in infrared lenses.

Despite the rise in demand, market participants see a substantial increase in germanium consumption – and support to germanium prices – as unlikely, due to adequate supply.

Fastmarkets’ weekly price assessment for germanium 99.999% Ge min, in-whs China was 7,000 -7,600 yuan ($1,007-1,093) on Friday March 18, unchanged since February 19.

The launch of the 5G iPhone in September was expected to boost demand for indium tin oxide, but the coronavirus pandemic has forced a supply chain slowdown that may delay further expansion of 5G and could hit demand for indium in the short term.

That said, companies such as Samsung have forecasted demand for 5G smartphones to rise compared to last year, even if of the smartphone market is showing signs of contracting. Indium prices did not come under pressure in February or March, because transport restraints in China have limited availability.
Fastmarkets’ latest price assessment for indium 99.99%, exw China was 940-970 yuan ($132-136) per kg on March 18, slightly down from 945-970 ($132-136) yuan per kg. This is the first fall after prices firmed up during February on reduced indium availability.

The development of the high-speed 5G network was expected to support gallium demand this year, especially for gallium arsenide semi-conductors and gallium nitride semi-conductors. As above, disruptions in the supply chain are likely to reduce or at least delay the extra demand expected, sources say.

It is possible that consumer electronics companies will start using chargers that use new gallium nitride technology to replace silicon. This transition could also be postponed, as the new technology is still more costly to produce than silicon and within the current global situation, industry can lack of incentives to switch over, sources told Fastmarkets.

In the short term, even if demand is not set to rise as predicted before the pandemic, the gallium market in China has been buoyed by reduced supply.

Fastmarkets’ assessment for gallium 99.99% Ga min, in-whs China hit 1,000-1,050 yuan ($143-150) per kg on March 18, up from 970-1,000 yuan per kg the previous week. 

The rollout of the 5G network in China was set to support demand for battery-grade lithium in 2020, but, the coronavirus outbreak has hit the demand outlook for smartphones and consumer electronics as well as for EVs, and lithium cobalt oxide material producers have reported a reduction in orders

Sources polled by Fastmarkets in recent weeks said that the virus containment measures implemented in China disrupted production lines and hit demand for battery-grade lithium. Nevertheless, lithium prices have not dropped significantly since the beginning of the year as the price environment was already weak.
Fastmarkets’ price assessment for lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range exw domestic China settled at 43,000-49,000 yuan per tonne on March 19. This was down just over 2% from the beginning of March.

Stainless steel:
The effect of the coronavirus outbreak on the stainless steel market has been slower demand, although this has varied between sectors, and a suspension of Italian production. On the demand side, the automotive industry in Europe has effectively shut down, while consumer demand for white goods has dropped off sharply. Yet medical and pharmaceutical demand for stainless steel has increased, as well as from the food processing industry, and this has at least partially offset the downturn from other sectors. Mills in Italy have suspended operations and, while production in the rest of Europe has largely continued unaffected, many mills have announced price increases in anticipation of tighter availability.

Fastmarkets’ price assessment for stainless steel cold-rolled sheet, 2mm, grade 304, transaction domestic, delivered North Europe was €2,000-2,050 ($2,138-2,191) per tonne on Frida March 20.

Prices for April material increased by €30-50 per tonne over March prices, with purchases seen at €2,030-2,100 per tonne delivered for grade-304 cold-rolled stainless steel sheets this week. Offers as high as €1,150 per tonne were seen but not yet accepted.

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