Tungsten price near two year high, page-4

APT Pricing heading in the right direction (with strength)
- Low supply
- Demand on the rise from both Europe & USA
- Reduction in recycling
- Chinese production costs
- Shipping delays

Al the right ingredients

Low supply, rising demandsend APT higher: Correction

Publisheddate: 03 March 2021

Europeanprices for tungsten intermediates have risen to an 18-month high, bolstered bylow inventories, Chinese production cuts, renewed spot demand and reduced scrapavailability.

Pricesfor ammonium paratungstate (APT) with min 88.5pc WO3 content climbed to$260-265/mtu duty unpaid in-warehouse Rotterdam today, an increase of $10/mtufrom the 25 February assessment of $250-255/mtu, after steadily rising sincethe start of the year. APT prices are now at their highest since reaching$268-280/mtu du Rotterdam on 10 June 2019, Argus data show.

"Momentumis building in Europe… demand is slowly coming back," a market participantsaid, noting the return of some large consumers to the European spot market.

Around40t of APT was recently sold at $263/mtu du Rotterdam, and another 20t tradedat $265/mtu this week. Meanwhile, a US buyer booked 10t of tungsten at$263/mtu.

Risingfreight costs because of container shortages and lockdown restrictions in manyparts of the world have delayed commodity shipments into Europe, triggeringsharp price increases in the region. In addition, soaring tungsten scrap pricesamid reduced spot market availability pushed demand for tungsten intermediateshigher. Argus-assessed consumer prices for 99.9pc min tungstenscrap solids rose for three consecutive months to reach $33.15-35.40/kg dutypaid US fob processor on 26 February.

The paceof APT price gains in Europe was slower before China's lunar new year holidaylast month, but prices rallied by 7pc in the second half of February, comparedwith a 5.6pc jump in January.

Low stocks

Weaktungsten prices and sluggish spot demand have led to a steep drop in Europeanmarket liquidity over the past three years, with prices sliding from a 2018high of $350/mtu. This has led to most traders reducing their stocks and beingreluctant to take positions in the market despite the continuing price rally.

But thelack of spot market buying and the stock drawdowns over the same period haverenewed demand for replenishing inventories, while the limited number ofsellers has hit competition.

"Consumersneed to buy more this week… and they have no-one to buy from," one marketparticipant said. Exports of tungsten intermediates to Europe have been fallingfrom China, Bolivia and central Africa over the past few years. Chinese APTexports declined by over 66pc to 1,064t in 2020, from 3,161t in 2019, whiletungsten trioxide shipments fell to 4,212t from 7,691t over the same period,according to customs data.

Tightnessin Chinese concentrate production at the same time as a seasonal decline inoutput from Russia and Mongolia also lifted prices for 65pc min tungstenconcentrates, which climbed above $200/dmtu in the final week of February.

China export prices rise

China'stungsten exports have fallen significantly because of weak global demand amidCovid-19, and because of production cuts. The country produced 138,612t of tungsten concentrate containing 65pc tungsten trioxide in 2020, down by 5.31pc from 146,380t in 2019, data from the China nonferrous metals industry association show.

Tighteravailability has led Chinese domestic consumers to raise their bids for APT andtungsten concentrates. Chinese state-controlled tungsten producer Xiamen Tungsten increased its APT bid price for the second half of February, while tungsten carbide producer Guangdong Xianglu also upped its bid for the same period.

RobustChinese consumption and curtailed production are further supporting globalprices, many market participants said. Argus-assessed export pricessurged by $8/mtu today to $258-263/mtu fob China, while domestic APT priceshave averaged over 6pc higher this year at 136,712 yuan/t compared with the2020 average of Yn128,275/t.