Article from Argus MediaOiland gas, aerospace driving US...

Article from Argus Media

Oiland gas, aerospace driving US tungsten demand: ITIA

Publisheddate: 19 October 2022

Strongdemand from the oil and gas industry as well as the recovery of the aerospaceindustry will be key in driving US tungsten carbide consumption in the comingmonths, as demand for residential construction projects remains under pressure,delegates at the International Tungsten Industry Association (ITIA) in Brusselsheard today.

"Interms of demand, the tungsten market in the US in 2022 will be significantlyabove the 2021 level but will not reach the 2017-18 level," US-basedsupplier Global Tungsten and Powders director of sales and marketing TeemuLiukkonen said. "We should see demand at similar levels for the nextmonths… It will be supported by strong employment figures, infrastructure billeffects, and defence spending," he added, even though "there is alsoa lot of uncertainty over geopolitical factors and supply chain risks".

Oneof the main demand drivers for cemented tungsten carbide — alloys made oftungsten and cobalt or nickel — will remain the oil and gas sector. Currently,oil and gas accounts for 20pc of US demand for cemented carbide, and it isexpected to take up a larger market share going forward, Liukkonen said.

"UScrude production is forecast at an average of 11.8mn b/d in 2022 and 12.6mn b/din 2023, which could set a record high for US crude production," he added.

"Naturalgas rig counts are up by 3.7pc year on year," Liukkonen said. "At thesame time, natural gas and natural gas liquid prices are increasing in analready elevated market."

Inaddition, applications for tungsten alloys in the aerospace industry are beingsupported by a strong comeback after Covid-19 lockdowns, and the long-termoutlook indicates further growth. "The airlines will be doing very well —airlines will need 41,000 new airplanes over 20 years," Liukkonenestimated.

Meanwhile,automotive demand accounts for around 17pc of total market share, he added,noting a severe decline over the past two years owing to the ongoing chipshortage.

Theconstruction sector is also lagging behind 2022, delegates heard, currentlyaccounting for just 7pc of cemented carbide demand. Higher interest rates andinflation are hampering growth, although increased infrastructure spendingcould partially make up for the decline in residential building, Liukkonensaid.

Meanwhile,mining takes up 15pc of the total demand. "Year-to-date coal production is4.5pc higher than last year for the same period," he noted.