Indium set to star as TV demand surges

By Kylie MacLellan

LONDON (Reuters) - Surging demand for televisions largely driven by China's economic stimulus package is expected to boost the price of indium, a metal used to make liquid crystal display screens, by the end of the year.

An expected return to the indium market by the Japanese -- the world's top consumers of the metal -- alongside increased demand from the renewable energy industry and private investors also look set to strengthen the silvery-white metal's gains.

Investment in hi-tech products and a range of subsidies to encourage rural citizens to buy electronic goods is boosting Chinese consumption, which has left manufacturers scrambling to secure indium, about 90 percent of which is used in LCD screens.

"We certainly have seen this," said Noah Lehrman, senior vice-president at New York-based Hudson Metals. "We've seen prices in China rising very quickly."

At around $300 a kg, indium prices have nearly halved over the last year, and are now less than a third of the highs over $1,000 (605 pounds) they reached in 2005 and 2006.

Measures by China -- said to be the world's largest producer of indium -- to support the electronics industry were announced in February and form part of the government's broader two-year, 4 trillion yuan (353 billion pounds) stimulus package.

Demand for indium generated by booming TV sales combined with the metal's relatively constrained supply -- it is a byproduct of zinc production, which has seen sharp cutbacks for more than a year -- mean prices are set to rocket.

"By the end of the year you could see indium going back towards its near-term historical highs of $500 to $700 a kg," Lehrman added.