LONDON – The global economic downturn had a marked effect on the tantalum supply/demand balance. Demand in 2009 will probably prove to be 40% down on 2008, but some market watchers believe it will fully recover by 2012. 
 
Whether the supply will be in place to meet that demand is another issue entirely.
 
In mid 2008, tantalum consumption was on a strong growth trend in its principal markets – electronics and aerospace superalloys – which make up around 75% of tantalum consumption. Adequate primary supply was in place, along with substantial quantities of scrap, which is mostly generated during capacitor manufacture.
 
By the second half of 2009, the tantalum market faces a period of uncertainty that will, quite possibly, remain until 2012, according to Roskill Information Services. 

A large part of the primary supply chain is not producing in 2009, with no clear indication about when, or if, it will come back to the market. Inventories are running down; scrap is in shorter supply because of a fall in capacitor manufacture. It is possible legislation under consideration in the US could severely restrict or even halt the supply of tantalum from Central Africa, says Roskill.
 
Several projects are at various stages of development around the world and some could be in production by 2011 or 2012.  Combined, their output would solve the tantalum supply question for the foreseeable future and obviate the need to source conflict minerals. 
 
It is almost certain a tantalum supply squeeze is approaching. If demand picks up more quickly than expected, a spike in spot prices seems inevitable, says the firm.

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