Last updated: October 14, 2013 11:12 pm

Tech-related precious metals tumble

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The prices of an obscure group of precious metals used in high-tech applications from smartphone screens to computer hard drives have tumbled to their lowest in years as manufacturers step back after a wave of buying.

Rhodium, ruthenium and iridium make up a little-known corner of the periodic table rarely scrutinised by commodity investors.

But a price slide for all three in recent months points to weaker demand from the high-tech industries that use them.

It will also be a blow for the beleaguered South African platinum industry, which produces the vast majority of the world’s supply of the metals as byproducts of platinum production.

The price of iridium, used to grow crystals that help to make screens for smartphones and flatscreen TVs, has fallen 43 per cent since the start of the year to a three and-a-half year low, according to pricing data from precious metals refiner Johnson Matthey.

Ruthenium, used in the manufacture of computer hard-disk drives, has tumbled by a third since mid-July to its lowest since 2005.

Rhodium, used in catalytic converters in cars, has lost 90 per cent of its value from a 2008 high, trading at a nine-year low this summer.

David Jollie, precious metals analyst at Mitsui Precious Metals, said a boom in manufacture of screens using iridium, and hard-disks using ruthenium, had come to an end.

“What you’ve seen both in ruthenium and iridium over last few years is big builds of stock. We’ve come to the end of the current growth cycle of both of those industries.”

While demand for screens for smartphones and TVs remain strong, manufacturers are no longer increasing capacity and therefore have no need to buy iridium, which is not used up in the process.

Indeed, some have been selling the metal back to the market, traders said.

“The problem with iridium crucibles is they don’t get used up,” said Matthew Turner, precious metals analyst at Macquarie. “Unless the demand for them keeps rising, the demand for iridium collapses. I guess that time has come.”

The ruthenium market has also been hit by an increase in supplies with some South African miners significantly increasing their sales from inventories over the summer, according to several traders.

“Weak prices have already led to good buying interest,” noted Heraeus, a leading precious metals refiner and trader.

Finally, rhodium has been under pressure for several years as car manufacturers attempt to reduce their consumption of the metal following a painful 500 per cent price spike between 2005 and 2008.

The drop in the prices of the metals will be a blow to South African miners.

While production of the metals is tiny compared with larger markets like platinum or gold, it has for years provided a small boost to miners such as Anglo American Platinum, Impala, Lonmin and Aquarius.

For example, in 2008, rhodium accounted for 27 per cent of Impala’s revenues. Last year, that fell to less than 6 per cent.

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