Demand recovers after volatile period

The first few years of the millennium witnessed a volatile gallium market, according to a report from London-based Roskill Information Services.

The authors of The Economics of Gallium report that after a period of steady growth in the latter half of the 1990s, demand for gallium soared in 1999 and 2000, driven by a booming demand for gallium arsenide-based semiconductors used in cell phones. Contributing to demand were strong sales of light-emitting diodes for displays used in fibre-optic data links.

Analysts had predicted that worldwide gallium demand would grow at 6.5% per year to reach 350 tonnes by 2008. However, 2001 saw a downturn in the electronics sector, and gallium demand fell by one-third to 141 tonnes, causing major producers to withdraw from the industry. Indeed, China suspended production.

Demand is expected to have recovered slightly in 2002 to roughly 162 tonnes, but a return to the levels of 1999 and 2000 is unlikely before 2004-05.

Looking ahead, the consumers wanting new technologies such as mobile phones with graphic displays, and LEDs, a type of semiconductor that produces brighter, longer-lasting light, could return the gallium market to the double-digit growth seen in the 1980s and 90s. Sales of LEDs have grown as high as 58% per year over the past five years, and the market is forecast to exceed US$3 billion by 2006. However, in the 90-page report Roskill forecasts that annual growth in gallium demand will average a more sustainable 8-10% per year to reach 280 tonnes by 2008.

Major producer GEO Gallium, which has plants in France and Germany, plans to build a 100-tonne-per-year gallium facility in Pinjarra, Australia, though completion of the project has been deferred pending an improved gallium market.

Meanwhile, in China, there have been numerous capacity increases in the past few years. Capacity is now estimated at 80 tonnes per year, though actual output is much lower. In 2001, Chinese production reached 25 tonnes, and in August 2002, all gallium production effectively ceased, owing to low prices and demand.

— The preceding is from an information bulletin published by London-based Roskill Information Services.