Ruthenium: Metal of the Future?
Update 7/25/10
As noted below the $175 long trade panned out, with ruthenium peaking around $245.
Recently, however prices have retreated to the $205 (base price) & a $175-190 OTC price. At this time we believe that ruthenium has stabilized with bids around the $180-185 area. We do not see any further downside. However, the upside will most likely be limited to the $225 to $275 area due to seasonal buying in the fall-winter time.
Bullish factors: As listed below still intact.
Possibility of hedge funds deciding to punt (unlikely) on the long side
Passage of time reduces long spec positions
Bearish Factors:
Economic uncertainty
Possible double dip recession
Spec long liquidation hangs over the market (probable cause of recent drop).
Recommendation: Scale up sell into strength above $225
The Case for Ruthenium
After languishing for years in the backwaters of the PGM market
Ruthenium finally enjoyed an upward move of historic proportions in 2004-2007,
Rising from $30/troy oz to over $800. In the aftermath of the credit crisis it has fallen back to as low as $60 & now stands at approx 175.
Bullish case: The primary reason for the bull case in ru is the growing demand due to
A broadening out of applications. For most of its history ru only knew a few applications
Such as chlor-alkali & resistors. New applications have emerged & are emerging steadily
They are:
1) Hard drives. Probably the largest consumers,still has years left of demand
2) Semiconductors. The same resisitive properties which helped revolutionize
Hard drives are being used in new generations of semiconductors. New chemical vapor deposition techniques are allowing the deposit of ru on heretofore inaccessible surfaces. Will contribute to the miniaturization trend in electronic components & devices.
3) Aerospace super alloys
4) Paste for plasma & LCD televisions
5) Various automotive applications
6) Solar dyes
7) Cancer treatments
8) Numerous existing & future catalyst applications
These applications & more point to growing & stable demand. Use in high tech areas is a big positive.
Other bullish factors include possible instability in
Most important factor: relatively low price
Bearish case: Relatively large long positions in spec hands. Possible economic uncertainty & turmoil which might deter strategic & speculative buying. Lack of terminal
Market, preventing some hedge funds from entering. Relative illiquidity.
On balance, ruthenium would seem to constitute a decent trade , even at the 175 level.
Short term goal 250-400
Longer term, with the absorption & liquidation of spec metal ru could rise to 500-700
& with tight supplies become a rhodium like PGM.