Europe Concerns about FeW Supply

Supply concerns of ferrotungsten (FeW) in Europe are growing as the Russia-Ukraine conflict has hampered trade and deliveries of Russian alloys, leaving China as the main source of supply to the continent.

European 75% grade ferrotungsten prices came in soaring to $44-45/kg (Rotterdam, duty unpaid), the highest level since April 2014, with more recent offers as high as $45.80/kg (Rotterdam, in-warehouse). Overall, Argus' assessment has risen nearly 20pc since the start of 2022, also supported by tight spot supply of scrap and concentrate, while pushing up feedstock costs.

Some industry participants doubt there is enough global production capacity to offset the loss of Russian ferrotungsten exports, most of which typically go to Europe. But others say Chinese producers could ease supply pressure. " The Chinese have the upper hand. If there are no exports from Russia, then we need to find alternatives," said one European trader.

Argus last assessed Chinese export prices at $39-40/kg (China, FOB) on March 1, up about 10 percentage points from early 2022. Argus data show that the European market premium to Chinese export prices has widened since mid-January and is now at $5/kg, the highest level since May 2012, highlighting the regional supply the severity of the tightness, and the potential for Chinese exporters to compete in the European market.

Ganzhou JTG, China's largest producer of ferrotungsten, and other Chinese traders have recently received more inquiries from consumers in other countries - and negotiations on prices are still ongoing.

Some smaller suppliers in Vietnam and South Korea, which have either stopped output or produced very little in the past year, could increase production but are unlikely to make a significant contribution to filling the supply gap, some market participants said.

The total production of FeW in China is about 7,000 tons/year. According to Chinese customs data, total exports increased by 46% year-on-year to 2,195 tons in 2021. Brazil could also be a potential source of supply. One trader said, "Maybe swing production from Brazil will show up in Europe," one trader said, although they raised concerns about the grade and quality of the material."

Looking ahead, strict sanctions on Russian commodities or alloys, coupled with escalating shipping disruptions, could put further pressure on the FeW supply chain. Given the high degree of uncertainty regarding the future impact of the Russia-Ukraine conflict, many market participants are staying put and continuing to wait and see how events unfold.

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