LCDs Remain the Driving Force of the Indium Market

Indium: Global Industry Markets and Outlook (9th Edition)

LONDON, January 31, 2011 - The Indium market saw fundamentals begin to improve in early 2010 with
average annual increase in indium demand projected to increase by about 16%
from 2010 through 2013.

As demand recovers from the downturn in 2009, the focus of the market
will switch to the supply side and where new production will come from in
order to supply the rising consumption. Existing primary production capacity
is significantly above current output so there is some flexibility to
increase production at existing operations. In addition, it is possible that
capacity in China, which accounts for just over 50% of global output, is
higher than estimated giving further room for increased production.

Indium is a critical raw material for a number of developing information
technology markets, although the most important is that for flat panel
displays. Thin transparent films of indium oxide doped with tin (ITO) conduct
electricity. These ITO films are central to a number of display technologies,
notably liquid crystal displays and plasma displays. Demand for these flat
panel displays has remained particularly strong in the computer monitor and
television markets.

Flat panel displays, in addition to their predominant use in increasingly
larger televisions, both LCD and PDP, have also found further widespread use
in items such as calculators, watches, household goods, mobile phones, and
GPS navigation systems. Furthermore, technological innovations in computers,
including notebooks, and mini-notes have expanded the demand for flat panel
displays in the computer end-use sector. However,use of flat panel displays
is not limited to personal consumer applications. Non-consumer use in
professional displays, classified as Digital Signage Displays, continues to
increase.

This growth in indium demand has prompted a significant increase in
recycling since the early 2000s. By 2006, it was estimated that secondary
production had surpassed primary production of indium. At least 22 companies
worldwide were reported to be recycling indium in 2009/10. The Japanese
electronics industry generates a considerable amount of indium scrap,
principally in the form of spent ITO sputtering targets, which is then
recovered. Japanese indium recycling capacity is estimated to be
approximately 300tpy. Most of the recycled indium is reused in the form of
ITO.

Whilst, the use of ITO in LCDs will remain the major market for indium
and will continue to drive growth in indium demand. PVs for solar
applications are a newer and perhaps faster growing application, but there
remain significant questions over growth rates and also the technologies
involved. Forecasts produced by AIM Specialty Materials in 2010 give a growth
rate for global primary indium demand of over 15%py between 2009 and 2013.
Consumption of indium in ITO applications is expected to grow at 17%py, while
solar applications for indium could increase at nearly 40%py, albeit from a
much smaller base level. Even if solar applications were to be removed from
the forecasts due to the uncertainty surrounding them, demand for primary
indium would still be forecast to grow at around 13%py.

Indium prices have shown considerable instability over the past three
decades, with cycles of rapid increases followed by periods of steady
decline. The tightness in the market that began in late 2002 remained in 2003
pushing prices to US$330/kg in December 2003, tripling the prices quoted at
the end of 2002. The price rise continued through 2004 and early 2005,
reaching US$1,063/kg in March and April 2005. As indium prices spiked on
increasing demand in the electronics sector (flat screen television and
computer monitors), some analysts indicated that a contributing factor in the
rise was the falling prices for televisions, generating greater consumer
demand. In 2004, for the first time, China's production of LCD units
surpassed production of cathode ray tube (CRT) units.

Indium prices were rather volatile in the remainder of 2005 and into
2006, but from the end of 2006 onwards the general trend in prices was
downwards as supply caught up with the growing demand for indium. Prices
rallied in mid 2008 due to strong demand, but the decline in consumption due
to the recession in 2009 knocked prices back to levels last seen in early
2004.

Indium prices surged upward in early 2010, buoyed by purchases from
Japanese producers of LCDs who appeared to have completed a long period of
de-stocking and were beginning to rebuild inventories. Prices rose to a high
of US$630/kg in May 2010 and stabilised at around US$550-570/kg between June
and October. A thin market in November led to a slight drop in prices and a
wide trading range between US$505 and US$590/kg in November 2010, but there
was evidence of renewed interest in indium in December and prices were
beginning to firm slightly.

Prices for indium correlate relatively closely with demand, particularly
in recent years. In general, prices have tended to lead changes in demand as
the market anticipates periods of tightness in supply, although prices have
slightly lagged behind the most recent upturn in demand in 2010. This may be
due to a period of destocking by consumers.

Indium demand is forecast to increase quite strongly at over 15%py to
2013 and it appears that production of indium, both primary and secondary,
may struggle to keep pace. In this scenario, Roskill expects that prices for
indium will follow demand trends and could reach an average of around
US$850/kg by 2013. Further forward, supply of indium will have had time to
catch up to demand and, although consumption is forecast to continue to rise,
prices may stabilise.

Indium: Global industry markets and outlook, 9th editionis available at
GBP3000 / US$5000 / EUR4000 from Roskill Information Services Ltd, 27a
Leopold Road, London SW19 7BB, England. Tel: +44-20-8944-0066. Fax
+44-20-8947-9568 Email: info@roskill.co.uk Web: www.roskill.com/indium

Note to editors

The report contains 142 pages, 51 tables and 8 figures. It provides a
detailed review of the industry, with subsections on the activities of the
leading producing companies. It also analyses consumption, trade and prices.

For further information or a review copy of this report, please contact
Mark Seddon (mark@roskill.co.uk). To receive press releases via email, please
contact Prakash Ramachandran (prakash@roskill.co.uk).

Roskill Information Services Ltd, 27a Leopold Road, London SW19 7BB, England. Tel: +44-20-8944-0066. Fax +44-20-8947-9568 Email: info at roskill.co.uk .