According to Roskill, tantalum was somewhat protected from the worst effects of COVID-19 early on in 2020, with a supply chain based heavily in Africa, Brazil and, increasingly in recent years, Australia, with less than 7% of primary production taking place in China.
As the year progressed, however, the tantalum market was more greatly affected on the demand side, with major disruption to growth in aerospace alloys, capacitors for 5G and automotive, and anti-corrosion materials for chemical processing. However, recovery is now on the horizon.
Aerospace has perhaps been the most affected industry but had begun to turn a corner by the end of the year with a resumption of flying for the Boeing 737 MAX and a pick-up in monthly deliveries. Airline and aircraft manufacturer stocks have jumped 40-100% since end-October, although many of them are still worth less than half their value at the start of the year.
European air traffic stood at just 12% of 2019 levels in April 2020 but, by August, this had recovered to 49%. Despite some slide in the later part of the year, with levels of 36% expected in December, levels are forecast to be back up to around 50% in early 2021.
Recovery is also expected in other major sectors, with a resumption soon expected in the roll-out of 5G infrastructure, and higher rates of consumer spending encouraged by upcoming vaccines. Tantalum prices were still rising at the beginning of 2020 but transitioned to a declining trend from August based on reduced demand.
The rate of decline slowed in Q4, with tantalum concentrate (CIF China, 30% Ta2O5) at US$52/lb from the end of October, and prices began to rise in the final week of December, reaching US$53/lb by year-end. Roskill forecasts further upturn in prices in early 2021, reliant on the speed of demand recovery.
While by-product tantalum production from Australia was reduced in 2019 with lower demand for lithium, and then again in 2020 due to COVID-19, this sector is expected to rebound in 2021.
While plans for the return to higher mining rates had yet to be unveiled by lithium producers in late-2020, the tantalum market is watching closely for any signs of revival. During the previous period of ramp-up in 2018 and early 2019, large amounts of tantalum by-product entering the supply chain took market share from Africa and had a significant negative effect on prices.