Current Market Scenario   

High-purity alumina (HPA) is an end product of the non-metallurgical alumina. It is a high-value product that serves as a base material for the manufacturing of sapphire substrates that are utilized in various applications such as scratch-resistant artificial sapphire glass, light-emitting diodes (LED), and semiconductor wafers.

High purity alumina evaluates as an undersupplied industry in response to a consistent widening supply-demand gap every year. High purity alumina demand is witnessed at a significant pace due to its adoption in Led bulbs and as battery material however, the market is undergoing supply crunch.

Dependence of Sapphire Manufacturers

High purity alumina is a high-value, high margin, and highly demanded product as it is the critical ingredient required for the production of synthetic sapphire. High purity alumina is the only material used in sapphire manufacturing and currently, there is no substitute available in the market. Therefore, sapphire manufacturers are highly dependent on the high purity alumina availability to meet their production needs. On the other hand, synthetic sapphire is used to manufacture range products including substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch-resistant sapphire glass used for wristwatch faces, optical windows, and smartphone components. Therefore, increasing the adoption of sapphire is also increases manufacturers dependence on high purity alumina.

Supply-Demand Gap and Resulting Opportunities for New Entrants

Global high purity alumina market is operating in the introductory phase in its industry life cycle where significant demand is witnessed in the recent years. However, there have been supply crunch has been reported without any significant capacity additions in the last four year. Also, the market is lacking in terms of overall market players operating across the globe with limited production capacity. As of 2019, the global demand is reported around 30 kilotons whereas overall production is below 20 kilotons at a global level. Considering this, there has been a massive rise in high purity alumina prices seen and similar trends are anticipated in the coming years as well. As the market sees a wide supply gap that shows profitable opportunities for new entrants meaning that the market may become highly competitive in the near future with penetration of mid-scale manufacturers.    

High Production Cost – Challenge for Manufacturers    

The manufacturing cost of HPA is relatively high, as it involves high labor and energy cost. As the purity level of alumina increases, the utilization of energy increases, which corresponds to higher production costs. Companies are focusing on developing new technologies for manufacturing HPA, such as hydrochloric acid leaching, which may reduce the cost of HPA in the near future. The importance of this method is that the acid used in the process can be recycled or recovered and reused. However, the higher cost of production may impede the market growth in the near future, owing to the emergence of low-cost alternative technology. This factor is expected to negatively impact the market during the forecast period, but not on a large scale.