APT - slow steady climb...., page-3

Another article - same theme - China has reduced production,costs on the increase, supply constrained..

Global tungsten market influx on supply chain woes

Publisheddate: 26 January 2021

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A myriadof supply and demand shocks along the global supply chain have combined withthe US dollar's depreciation against the Chinese yuan to lift tungsten prices higher this month, despite weak consumer demand outside China.

On thesupply side, primary tungsten concentrates are in short supplyafter Chinese suppliers curtailed or halted productionin August. China's decision to cut production in the second half of 2020 was driven by oversupply, with supply then further tightened by Covid-19 lockdown restrictions, heavy rainfall and declining ore grades.

Thecountry's production of concentrates containing 65pc tungsten trioxide fell by 2.38pc to 126,675t in January-November 2020, down from 129,767t in the same period of 2019, data from the China nonferrous metals industry association show.

Atungsten concentrates buyer in Europe said they are willing to pay a slight premiumto European suppliers in order to ensure delivery without delay, stemming from soaring freight costs and logistical issues.

Furthermore,lower global tungsten consumption in 2020 has reduced the availability of scrap. US consumers are being "caught short by the scrap situation", one seller noted, with container shortages further exacerbating the sense of supply tightness. One supplier this week sold multiple containers of yellow tungsten oxide (YTO) to a consumer in the US at $245/mtu for prompt delivery, which is around $10/mtu above the European ammonium paratungstate (APT) price.

Thelatest Argus assessment for tungsten 99.9pc scrap solidsconsumer rose to $30.65-32.85/kg fob US processor on 31 December, up from$29.76-31.97/kg at the end of November. A trader indicated that scrap pricescould currently be as high as $33-34/kg in Rotterdam.

China hasalso raised its export prices amid stronger domestic demand and the dollar'sdepreciation against the yuan.

But anoverall lack of spot demand in Europe has left consumers grappling withshrinking margins, with one European consumer noting that stable-to-lowtungsten carbide prices and higher raw material prices are raising costs.Tungsten is used to produce cutting, construction tools and alloys used by theoil, gas and aerospace industries.

InEurope, the average monthly price for APT with minimum 88.5pc tungsten trioxide(WO3) has risen by nearly 6pc from December to average $233.75/mtu for Januaryso far — in line with rising Chinese export prices, which climbed by nearly 5pcto an average of $235/mtu fob China over the same period.

Pricesfor tungsten concentrates with minimum 55-70pc WO3 content rose to$180-185/dmtu on 26 January, up by 3pc from December's monthly average of$172.40/dmtu, while domestic prices in China rose by nearly 4pc month on monthto a year-to-date average of $13,572/t ex-works China.