Recently, the popularity of the small metal sector has continued to rise. Many investors have focused on rare earths, germanium, and gallium, which have been subject to export controls, but have ignored the main line of indium, which is about to explode.
Combined with the latest industry news from foreign media, China is increasing its export review of metal indium. The market generally predicts that formal export restriction policies for indium raw materials are likely to be introduced in the future. Indium-related targets are likely to directly start a round of strong rising prices next Monday.
Many ordinary investors are very unfamiliar with the metal indium, thinking that it is just an ordinary raw material used to make mobile phone screens, and do not see the industrial opportunities behind it.
As long as the resource structure, supply and demand relationship, new demand brought by the AI industry, and export policy changes are completely sorted out, the underlying logic of this round of market can be understood.
This article puts aside fragmented news interpretations, dismantles the full value of indium from the nature of the industry, and understands why export controls are expected to directly drive the price of the entire industry chain.
First of all, let’s clearly understand Indium’s unique resource monopoly advantage, which is the foundation for all markets to start.
Indium is a scattered metal, which is completely different from metals such as gold, copper and iron. There are no mines dedicated to mining indium in the world. Indium is only mixed in trace amounts in lead and zinc ores and can only be refined as a by-product of zinc ore smelting. The indium raw material that can be extracted from one ton of zinc ore is very small, and the indium content in the ore is only one millionth level.
This determines that the production of indium is completely constrained by the scale of zinc mining, and companies cannot expand indium production capacity alone. Even if the market price surges, it will be difficult to increase the supply of raw materials in large quantities in the short term, and the supply elasticity is almost zero.
Judging from global resource data, my country has the absolute right to speak.
The world’s mineable indium reserves are about 16,000 tons, and my country’s reserves account for 72.7%. The total annual global production of primary indium is around 1,100 tons. Our country produces about 800 tons, accounting for 73% of global primary indium production. Most of the world’s indium raw materials are exported from my country. Overseas countries can only rely on imports from my country if they want to obtain high-purity indium raw materials.
Although there are small reserves in other countries such as Peru and Canada, the ore grade is low and the smelting and purification technology is insufficient. The output can basically only be supplied to local companies and cannot be exported on a large scale.
Major countries in the semiconductor industry, such as the United States, Japan, and South Korea, have very little native indium production. Their panel companies and optical chip manufacturers have always been highly dependent on the import of domestic indium raw materials.
The United States and the European Union have long included indium in their strategic mineral lists. In recent years, they have been trying to build indium raw material reserves in an attempt to reduce their dependence on our country’s resources.
However, due to the resource distribution pattern, it is difficult for overseas countries to change the status quo of the supply chain, which also gives export control a strong policy influence.
Looking at the downstream demand structure of indium, the AI computing power industry is completely reshaping the demand system of indium, and market demand has entered a stage of rapid expansion.
For a long time in the past, more than 70% of the consumption of indium was concentrated on ITO targets, which were used to make transparent conductive films inside mobile phones, TVs, and computer screens. This is also the most common understanding of indium. The overall demand in the panel industry has maintained steady growth without explosive growth. The market price of indium has been fluctuating in a tepid range.
However, in the past two years, the AI computing power industry has given rise to new demands, which has directly changed the demand pattern of indium.
The core components in 800G and 1.6T high-speed optical modules are optical chips made of indium phosphide. The upstream raw material of indium phosphide is high-purity metal indium.
Nowadays, major technology companies around the world are frantically building AI computing clusters with a scale of 10,000 ka and 100,000 ka. The demand for optical modules has doubled, and there is a serious shortage of corresponding indium phosphide substrate materials, which in turn has driven upstream demand for high-purity indium raw materials to skyrocket.
Here is a set of real industry data that can visually reflect the size of the gap.
At present, the global market demand for indium phosphide substrate materials, compared with the compliance production capacity, the gap between supply and demand is close to 70%, and orders from overseas indium phosphide manufacturers have been scheduled until 2028.
The production expansion cycle for indium phosphide substrates is very long. It takes at least one and a half to three years to build a production line and process debugging. Even if overseas companies invest in building factories now, they will not be able to fill the raw material gap in the short term.
In addition to AI optical chips, copper indium gallium selenide thin film solar cells also consume indium raw materials. As new photovoltaic technologies continue to be implemented, indium consumption in the new energy field is also increasing year by year.
The stable demand of the panel industry is superimposed on the two major incremental markets of AI and photovoltaics. The overall consumption of indium continues to rise, but it is difficult to increase the supply of raw materials. The global indium market itself has entered a tight balance between supply and demand, which has paved the way for price increases.
Next, we will focus on interpreting the policy expectations brought about by this foreign media news, which is the most direct trigger for next week’s market.
According to the latest industry chain news disclosed by Reuters, domestic customs has recently significantly tightened the export review process for indium metal.
Previously, when overseas buyers imported indium raw materials, the approval process could be completed on the same day, but now the approval time has been extended to several days.
For the first time, European procurement companies are required to submit detailed information on end users. Regulatory authorities will verify the final use direction of this batch of indium raw materials to prevent high-purity indium raw materials from flowing into overseas semiconductor and defense-related industries.
It needs to be made clear here that as early as February 2025, indium compounds such as indium phosphide and trimethylindium have been officially included in the export control list. Exports must apply for export license approval and implement strict end-user review.
In the past, control only targeted indium compounds after processing. Now regulatory review has been extended to the upstream raw metal indium level, sending a very clear signal that the country is improving the export supervision system for the entire indium industry chain. The market generally predicts that the next step is to introduce formal export restriction policies for metal indium.
Some investors will have questions. Even if the review is only stricter and there is no direct ban on exports, why will it bring about market prices?
We can understand it based on the past market trends of two small metals, gallium and germanium.
When the news of export control first came out, the relevant targets experienced a continuous rise. After the official policy was implemented, overseas raw material purchasers panicked and prepared stocks in advance, further pushing up the price of raw materials.
Once the export approval of indium continues to be tightened, it will be significantly more difficult for overseas companies to purchase high-purity indium. In the overseas spot market, the supply of indium raw materials will immediately appear tight. International indium prices will be the first to rise, and domestic spot prices will follow suit.
The price increase of upstream raw materials will be directly transmitted to the entire indium industry chain. Domestic companies with indium ore resources and indium smelting capacity will see a significant increase in product profits. The capital market will predict the increase in corporate performance in advance, thus driving the relevant stock prices to start rising.
At the same time, we must objectively analyze the reality of the industry. There are almost no substitute sources of raw materials overseas.
Japan and South Korea have deep processing capabilities of high-purity indium and can refine domestically imported crude indium into ultra-high-purity indium for use in manufacturing indium phosphide substrate materials.
Once upstream crude indium exports are restricted, the supply of raw materials for Japanese and Korean companies will be directly blocked, and the overseas optical chip industry chain will be significantly affected.
If you want to open up new indium raw material channels overseas, you not only need to find high-grade ore, but also build a complete smelting and purification production line. The entire process is time-consuming and has no possibility of realization in the short term.
Based on the inventory situation, the global inventory of raw materials that can be used to produce ultra-high-purity indium is already at a low level. The total inventory is only enough for global indium phosphide companies to consume for about one and a half months. The buffer space for raw material reserves is extremely small. As long as the supply at the export end shrinks, the imbalance between supply and demand will immediately amplify.
From the perspective of domestic industrial development, the implementation of export control also has positive significance and is in line with the long-term goal of upgrading the domestic industrial chain.
Previously, we exported a large amount of crude indium raw materials. After overseas companies purified and processed them, they then exported high-end products such as indium phosphide substrates to China at high prices. Domestic optical module companies need to spend huge sums of money to import indium phosphide materials every year, and resource dividends are earned by overseas companies.
Through export control, priority is given to supplying high-purity indium raw materials to domestic domestic enterprises, which can help accelerate breakthroughs in domestic indium phosphide substrate technology, realize domestic substitution of high-end materials, improve the upstream industry chain of AI optical communications, and transform resource advantages into industrial advantages. This is also the development direction at the national strategic level.
Finally, sort out the corresponding market investment logic and look at this round of industrial opportunities rationally.
First, indium itself is scarce in resources, and the supply side is firmly restricted by zinc mine production capacity, with almost no increase in production capacity. The AI computing power industry has brought about a continuous explosion of new demand. The tight balance between supply and demand is the underlying logic determined in the long term. The market is supported by solid industry fundamentals and is not a short-term speculation.
Second, foreign media have reported the tightening of export review, and the market has formed strong expectations for the subsequent introduction of export restriction policies. This will become the most direct catalytic factor for the market next week. There is a high probability that funds will enter the market in advance and promote the sector to usher in a wave of market conditions.
Third, the value of the industrial chain will be concentrated in the upstream resource end. Companies with indium ore resources and native indium smelting capacity will directly benefit from rising raw material prices, have the greatest performance elasticity, and are the most certain links in the entire industrial chain.
Based on all the information, the industrial logic of indium is completely clear.
Relying on the absolute monopoly of resources, the continuous release of demand from the AI industry, and the continued fermentation of export control expectations, the indium sector has ushered in a very clear time window.
As market sentiment is completely ignited, the indium concept is likely to see a strong market next week. Following the underlying logic of resource supply, policy expectations, and downstream demand, we can accurately grasp this round of industrial dividends.
