Tungsten Price Stability Seen, China Supply to Fall

Tungsten price is set for a period of stability over the next few years as the trend of falling Chinese exports is offset by expansions elsewhere and increased secondary supply, David Merriman, senior analyst at industry consultancy Roskill, said.

"We see the current price level as what it will be over the long-term," he said at Roskill's Minor Metals Seminar on Tuesday.

Ammonium paratungstate (APT) prices are currently quoted around $390/410 per kilo following a min-bounce this year from depressed late-2012 levels but they remain below the 2011 peak of $460.

"Restocking pulled prices up in early 2013. That has slowed and prices are expected to stabilise," Merriman said.

China will remain the key influence in the market on the supply side - the country accounted for 82 percent of global mine output in 2012, producing some 67,500 tonnes of tungsten (in terms of metal content). Production growth generally runs at around four percent per year, he noted.

But less of this increased supply is directed towards the export market amid quota restrictions. From the 2005 level of 18,200 tonnes, the quota has been cut to a current 15,400 tonnes. For raw material APT, exports are down 24 percent since 2011 but tungsten carbide shipments have fallen just 3.5 percent.

"This represents a move by China to reduce exports of intermediate material in favour of value-added products. Exports are likely to continue to decline as more material is consumed domestically," Merriman said.

China’s government regulates its tungsten industry by limiting the number of exploration, mining and export licenses it grants, limiting or forbidding foreign investment, imposing constraints on mining and processing and establishing quotas on production and exports.

Despite this, additional availability is expected from Russia, Spain and Portugal, as well as from the growing recycling sector.

"Secondary output is expected to increase by eight percent to 2018, mostly from Asia and Europe, and will account for 28 percent of production then," Merriman said.


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