A recent slowdown in demand is weighing on the cadmium market, but European prices have only edged down slightly and remain at historically high levels owing to constrained supply.
European prices were last assessed yesterday at $2.20-2.40/lb du Rotterdam for minimum 99.95pc grade and $2.30-2.50/lb du Rotterdam for minimum 99.99pc grade — down by just 5¢/lb from a week earlier.
Buying interest — which is largely driven by India and the country's demand for jewellery around major religious festivals and holidays — has slowed in recent weeks and spot trade is sparse, albeit occasional deals have been done within Argus' assessment ranges.
India's cadmium spot market is highly cyclical and currently "off season", in addition to which some supply has been freed up after getting stuck in a customs bottleneck last month. "For almost 10 days, all shipments got stuck at customs owing to IT issues at the portal for online duty payment," a market participant said, adding that the shipments have since been released.
But despite low demand and the resolution of that particular supply squeeze, European prices are still at historically high levels (see chart), remaining above $2/lb since March, after rarely breaching the $1.50/lb mark in previous years. And despite a widespread consensus that the market is under some pressure, there is no sign yet of prices returning to their old norms because underlying supply is still tight.
Cadmium is largely produced as a by-product of zinc, and high energy prices have curbed output in the past two years as zinc smelters struggle to control costs. The International Lead and Zinc Supply Group expects global supply of mined zinc to rise by 3pc this year to 12.86mn t thanks to anticipated production hikes in several countries, and more Asian-origin zinc has recently been seen circulating Europe's spot market to offset European production cuts. But it remains to be seen when the rise in global zinc production will also start pushing much more cadmium into the market.
Furthermore, increased manufacturing activity in China — the world's largest cadmium consumer — since 2022 has pushed up the country's requirements, albeit that market is now also starting to dip. The conflict in Ukraine has restricted supply from Russia, which previously exported around 200 t/month, and India's own cadmium producers have faced their own challenges maintaining volumes in the past two years.
In the long term, market participants told Argus they are monitoring some substitutions of zinc for cadmium in India's imitation jewellery sector, which will also support demand. The use of cadmium in jewellery manufacturing is banned in most countries for health and safety reasons and the Indian government has committed to restricting its use in jewellery.
Cadmium is also used in pigments, coatings and alloys, and critical electronics applications, including medical imaging and thin-film solar. India is one of the world's largest cadmium importers and a global production hub for nickel-cadmium (NiCd) batteries. NiCd batteries provide critical backup power for hospitals, offshore platforms, steel mills, underground metro systems, high-speed trains, commercial aircraft and defence installations.
