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Iridium holds at record $6,000 on 5G and green hydrogen hopes

(ATF) Iridium is holding on to a record price of $6,000 per ounce that it hit in mid March. A rally of more than 130% so far this year – more than bitcoin’s rise of more than 100% – has drawn attention, but the key to iridium’s long-term prospect is demand for 5G phones and green hydrogen energy.

Supply tightness from South Africa, the main source of iridium at roughly 80% of production, and strong demand in the electrical and electrochemical sector drove the price per ounce to a new record in mid March.

Iridium is known as a platinum group metal (PGM) as it is mainly produced as a by-product of platinum mining.

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Iridium is a critical element in several niche products, including temperature resistant crucibles used to grow synthetic crystals for electronics, high-performance spark plugs, medical devices and iridium-coated electrodes for naval ballast systems.

But it is anticipated demand for 5G smartphones and potential eventual use in green hydrogen energy production that is underpinning long-term forecasts for the metal.

Rate of adoption

Premium 5G phones are propping up demand for organic light-emitting diode (OLED) displays.

“Costs are declining as more manufacturers release 5G handsets, which will accelerate the rate of adoption,” German firm Heraeus Precious Metals said earlier this year.

OLED technology, which is used in consumer electronics and is built on an iridium compound, is currently the fastest growing display technology.

“OLED screens have many advantages over LED and LCD screens in terms of picture quality and efficiency,” Heraeus said.

“Electrical end-uses, including OLED display, accounted for around 70,000 oz of iridium last year, 31% of total demand.”

Heraeus said that according to International Data Corporation forecasts, global smartphone shipments are expected to increase 5.5% year on year in 2021, boosted by a post-pandemic recovery in demand and 5G device interest.

“5G is anticipated to be a key driver of growth, boosted by the success of Apple’s full iPhone 12 line-up and selected Samsung Galaxy handsets,” Heraeus said. “IDC expects 5G smartphone shipments to account for more than 40% of global volume in 2021, growing to 69% in 2025.”

Split water

Iridium can also serve as a catalyst in electrolysis to split water into oxygen and hydrogen, which is increasingly in demand as a cleaner source of power than fossil fuels.

Many of the more widely used- and traded – metals that are involved in electric vehicle production have fallen from recent highs, as a slow recovery from the economic impact of Covid-19 has reduced anticipated production in some markets, such as Europe.

Iridium has not been affected by this move, however.

This was partly due to a relatively recent supply interruption, as Anglo American Platinum in South Africa had to shut its plant due to a series of water leaks in November and will remain closed for a full rebuild throughout 2021.

Iridium has the longest processing time of all the PGMs, so this means that supply is set to be tight for some time.

And while supply issues from South Africa will come and go, the dual sources of demand from 5G phones and green hydrogen are likely to ensure strong demand for iridium in the medium term.

Jon Macaskill

Jon Macaskill has over 25 years experience covering financial markets from New York and London. He won the State Street press award for 'Best Editorial Comment' in 2016


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