This Tech Metal Is Seeing Strong Gains For 2015By Kitco News
Wednesday September 23, 2015 11:50
Earlier this year we reported about hafnium as one of the hopefuls within the technology metals family. Prices have in fact gone up by another 40% since May. Reason enough to take another look at the metal and its potential for investors.
Explaining the market to us is William Hattan, an independent investment broker with over 30 years of experience in the field.
“Hafnium is our largest holding, and a market shortage is starting to materialize,” Hattan explained. “Worldwide yearly production is just over 70 tons, split between two suppliers: Cezus (Areva) of France, and ATI (USA). Its main application is the nuclear industry, some of the metal goes into super alloys. After the 2011 Fukushima earthquake, nuclear technology fell out of favor. Because of that, the production of zirconium, which is where you get hafnium from, went down considerably. The ratio of zirconium to hafnium is often just 50:1. Companies that had stockpiles ran through those quickly.
“As of today, Cezus is sold out to the free market for the rest of the year. Consumers entering the market now are going to have to wait. That makes it an intriguing market,” Hattan added.
On the super alloy side, a hafnium based alloy just broke the world record in melting points. Even though it isn’t used in large amounts it is critical to the production of aircraft engines and industrial turbines. The continuing trend to build lighter and lighter aircrafts increases the need for super alloys to ensure turbines can still thrust a plane in the air. With aircraft producers like Boeing and Airbus having record backlogs, demand is likely to be strong in the near future.
How does one invest in Hafnium? Hafnium is sold in different levels of purity, largely pegged to its remaining zirconia content. Prices were as low as $ 650 per kilogram last year but are now up to $ 1,200 – 1,500 per kg, depending on purity. ATI increased prices by about 10% per quarter recently. Hattan believes this could take the market to $ 2,000 per kg by the end of next year. “ATI or Cezus only leave small amounts for the spot market. It is not like any single person could buy directly through them. So I put together a select group of clients and go to several traders who have availability”.
Hafnium is available in its metallic form as bars or grain.
“Because of this narrow market, you have to sell into the rise. Hafnium’s story is almost parallel to rhenium which went from $ 675 / lb to $ 5,000 / lb several years ago. At the time of the rhenium peak we sold at an average of $ 3,300 and a high of 4,200. If you try to wait for the absolute peak of these markets you can get burned very badly because they are very thinly traded, and they are not the easiest to liquidate”. Many of Hattan’s clients hold their portfolios for 2-3 years or more.
“2016 could be a very turbulent, volatile year for hafnium because of the many unknowns,” concluded Hattan.
We will be following this development closely.