Tellurium Market Update (December 12, 2012)

After a brief resurgence between August and October, tellurium prices are falling, indicating that anticipation of a return in demand may be premature.

The price rally that began a few months ago in China appears to have been driven by speculative buying rather than consumer demand. Currently, demand is weak and the prices sought by end-user groups have slid back to levels seen in early summer.

European prices for 99.99-percent-grade tellurium are trading in the $120 to $135 per kilogram range, while Chinese prices were unchanged over the first two weeks of December at 1,200 to 1,250 yuan per kilogram (US$192 to $200), Metal-Pages reported.

The solar panel, refrigeration and automobile industries, all of which are major users of tellurium, have experienced modest growth in the recent months, but outstanding surpluses of the metal have muted any price impacts.

First Solar (NASDAQ:FSLR), one of the largest single consumers of tellurium for thin-film cadmium-telluride photovoltaic solar cells, has not been active on the market since reducing its output earlier this year. The company is said to be holding significant stocks and not taking any additional material out of the market.

Chinese producers’ resistance to accepting lower prices for their metal have left a gap between supply and demand, allowing surplus metal to pile up, a Shanghai trader told Metal-Pages.