Tech Metal Bull Trend Unstoppable; Rhodium To Shine - Market Specialist
 |
| Photo courtesy of Nick Beer/Shutterstock.com |
(Kitco News)- Continued electrification of theglobal auto sector will provide critical support for the technology metals sector, according to one market analyst.
 |
| Bodo Albrecht, tech metals specialist |
In an interview with Kitco News,Bodo Albrecht, tech metals specialist, said that he sees the tech metal sectorstarting a new bull cycle as demand from the auto sector is expected to pickup.
“The long-term uptrend isunstoppable,” he said. “The world’s population is growing; demand for electronicswill grow, but what won’t grow is the supply of raw materials.”
Tech metals make up a relativelynew commodity sector, used to describe the metals and rare earth elements thatare used in electronics and sustainable energy. These commodities can be foundin everything from smart phones, flat screens to cars and homes.
Albrecht said that one specialtymetal that he likes is rhodium, which is also part the platinum group metals.Rhodium is a critical component in catalytic converters, which, along with palladium,is used in gasoline and hybrid vehicles.
“Rhodium is the metal that peopleneed to be looking at and talking about,” he said. “I think we are juststarting to see the metal take off.”
Rhodium has been the bestperformer within the precious metals market and is currently up 38% since thestart of the year, last trading at $2,185 an ounce. The price is up 280% sinceits lows in 2016.
Albrecht said that he sees strongdemand for hybrid vehicles -- that run on both electricity and fuel - ascountries, notably China, implement stringent environmental policies. He notedthat hybrid cars are currently the best transition between gasoline vehicle andfully electric vehicles; they are attractive to consumers whoare concerned about range limitations with electric cars, he explained.
He said that he also expects the popularity of hybrid vehicleswill grow as gasoline prices are expected to rise. So far thisyear, gasoline prices are up more than 11%, according to data from the U.S.Energy Information Administration.
Along with rhodium, Albrecht saidthat he also likes gallium, which is a critical component in semiconductors. Headded that demand for this metal is expected to continue to grow as consumerslook for more computing power in their electronics and computers.
While there is growing potentialwith the tech metals sector, Albrecht said that investors need to have aspecific long-term mindset when creating a position.
“It’s not like gold where you canhave a short-term view and get in and get out quickly,” he said. “These marketsare fairly small and can be volatile, so you have to focus on the long-termtrend.”
Not only is demand for techmetals expected to grow, but Albrecht said that he sees the potential forsupply disruption as the U.S. escalates its trade war with China, which hasmassive stockpiles in some of these metals.
“[President Donald] Trump is starting a tradewar with a country that holds 85% of the supply of these critical metals,” hesaid. “This could go very bad for some companies very quickly if the trade warescalates.”
By Neils ChristensenFor Kitco News
Follow neils_C
nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.