Cadmium a player in heated market

Firmness in the market for cadmium is being sustained by strong demand from the makers of nickel- cadmium batteries, Roskill of London reports in a new study on the metal.

In the longer term, however, cadmium, which surged from $1(US) per lb to $9 in little more than a year, and has been selling in the $7.80-$8.15 range, may suffer a decline in demand because of the substitution of other battery systems.

Roskill points out that the price of cadmium represents only a small proportion of the cost of manufacture of nickel-cadmium rechargeable batteries. In turn, the batteries represent only a small proportion of the price paid by consumers for the purchase of the original equipment in which they are used.

The cost of the nickel content of the rechargeable batteries is larger than the cost of the cadmium content. And, says Roskill, since the price of nickel this year has shown the same characteristics of volatility as the cadmium price, the producers of the batteries must surely be doing research into any available substitutes. Supply factors

A number of routes could lead to increased supplies of cadmium, Roskill says, listing recovery from spent nickel-cadmium batteries, the processing of a higher proportion of cadmium sponge through to cadmium metal, the return to cadmium recovery circuits of sponge already stockpiled, and the preferential purchase of cadmium-rich zinc concentrates by zinc smelters who may be willing to pay premium prices for such concentrates at current prices.

Non-Communist world capacity to produce refined cadmium is about 17,000 tonnes per year, compared with 1987 production of 14,500 tonnes. Therefore, Roskill says, existing capacity (given the higher prices) can still make a significant contribution to primary recovery.

The company points out, though, that even at $10 per lb, the revenue from cadmium recovery and refining amounts to no more than about $66 per tonne of zinc, compared with $1,100 from the zinc itself. (Cadmium, mined as a byproduct, is contained in virtually all commercial ores of zinc and in some lead ores.) While the metal represents a significant addition for smelters and refiners with existing cadmium refining capacity, it is unlikely to encourage new capacity unless, and until, cadmium prices have shown a stability at those price levels over a much longer period than a few months, Roskill says.

Not much growth in cadmium production is expected insofar as it is tied to primary zinc production, which shows little prospect for anything but slow growth, Roskill says. The routes to increased supply, the company says, lie in improved recovery in primary circuits and in secondary recovery from nickel- cadmium batteries. Price volatility and any real prospect of substitution do not make for a secure, longterm demand, says the company.

Demand for platinum group metals will exhibit significant growth through to the year 2000, the demand to be driven largely by worldwide developments in the automotive field, Hull and Co. of Greenwich, Conn., reports.

In a new study, Hull says total world demand for platinum group metals should increase about 32% over the period 1987-2000. “The key factor driving increased demand will be widespread acceptance of catalytic emission control devices by the European automotive industry early in the 1990s and significant use of such devices in other areas, such as Brazil, later in the decade,” says the study.

The relatively lenient automobile exhaust emission standards adopted by the European Community will not serve to significantly retard the growth of the European market, says the study, which also points out that catalytic converters based on platinum group metals will ultimately be installed in most new vehicles.

Hull says the supply of platinum group metals should exceed demand in the near and intermediate term primarily because of significant increases in South African mining output. (South Africa supplies more than four-fifths of the world platinum market.)

“The expanding demand trend should cause the supply-demand balance to tighten signficantly during the 1995-2000 period and result in a positive demand balance of about 5% at that time,” says the study.

The London Metal Exchange (LME) will introduce a new special high grade zinc contract. Zinc delivered into this contract will be of minimum 99.995% purity and the major currency will be expressed in U.S. dollars. All other conditions relating to shapes and weights, size of lot, warrant, delivery points etc., will be identical to the existing high grade contract.

Trading will commence Sept 1, with the first cash position falling due Dec 1.

The LME has also decided that the major currency in the existing high grade contract will be expressed in U.S. dollars. Initially both contracts will run in parallel. Trading of options on the new contract is not expected to be available until the new contract is well established.