Tungsten: Global Industry, Markets & Outlook
Now updated and released every 12 months, Roskill's ‘Tungsten: Global Industry, Markets & Outlook’ report brings you the very latest data and analysis in this commodity critical to industrial applications.
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Primary tungsten supply is dominated by China, with Chinese companies producing just under 80% of tungsten mine output in 2015. Outside of China, production in the rest of Asia has grown strongly since 2014 owing to the start-up of the Nui Phao polymetallic project in Vietnam. Now 8% of primary mine production is accounted for by Other Asia, followed by 5% in the former CIS countries – largely Russia and Mongolia.
Several other companies have started tungsten mine production in the last five years, including Wolf Minerals at Drakelands in the UK, the Wolfram Camp operation in Australia (started by Deutsche Rohstoff and later acquired by Almonty Industries) and Premier African Minerals at the RHA project in Zimbabwe. There are a number of other promising tungsten mine projects under development, which could further contribute to non-Chinese primary tungsten supply. However, there have also been suspensions in the market – such as North American Tungsten’s Cantung mine in late 2015, the Kvarz mine in Russia, the Pasto Bueno mine in Peru (early 2016), and several primary tungsten operations in Brazil: Barra Verde (2013), Bom Retiro (2013) and Jau (2014).
One key question for the supply side of the tungsten sector is whether stockpiles from the failed Fanya minor metals exchange will be released onto the market. Inventories for the key tungsten intermediate, ammonium paratungstate (APT), were reported to have been nearly 30,000t (gross product) prior to investigations into the exchange starting in October 2015 – equivalent to around a quarter of primary tungsten supply in 2015, on a contained metal basis. It remains to be seen what path the government will choose to take – but market participants have suggested an auction, a government-backed redemption of the stocks, or a strategic stockpile as possible solutions.
Whichever option is picked, the stockpile is expected to weigh down on any significant tungsten price recovery until 2018. The mid-price for European APT was holding in the US$192-195/mtu range in Q2 2016, an improvement on the late January 2016 price of US$162.50/mtu but still some way below the peaks of US$464/mtu seen in Q3 2011 (all on a nominal basis).
On the demand side, China also dominates world consumption, accounting for just under 50% in 2015 when primary and secondary tungsten use is taken into consideration. The next largest consumers are the European Union, followed by the USA and Japan. Other users outside of these areas accounted for just under 10% of all consumption in 2015.
There has been a clear increase in Chinese exports of downstream products, such as mixed carbide powders and sintered tungsten carbide (cemented carbide) products, which rose by nearly 20% y-on-y between 2014 and 2015. China is positioning itself as a supplier of value-added goods rather than raw materials and intermediate products.
By far the largest market application for tungsten is in the production of cemented carbides at around 60% of the total. Cemented carbides (hardmetals) are wear-resistant materials consisting of metal carbides held in a bonding matrix. The three main groups of cemented carbides are tungsten carbide-cobalt; tungsten carbide with cobalt and a significant amount of another additive such as cubic mixed titanium, niobium, or tantalum; and titanium carbide with a binder of molybdenum and nickel.
These hardmetals are used across a range of sectors that are mainly related to heavy industry – cutting tools, wear parts, and mining and construction tools account for the majority of hardmetal use and are similar in size to one another. Other applications include electronics, energy, and aerospace and defence.
Demand for cemented carbides is therefore strongly linked to manufacturing output, which in turn is heavily influenced by general economic conditions. The global economic downturn in 2008/9 saw a corresponding fall in cemented carbide production and thus tungsten demand, while the slowdown in the EU and Japan in 2014/15 has also impacted the market.
China’s increasing focus away from heavy manufacturing to value-added goods production and a service economy may affect its tungsten use towards the end of the outlook period. However, heavy industry is a cornerstone of any advanced society and should there be in slowdown in China, other countries will emerge to take up its position – which will ensure that growth in demand remains on an overall positive trajectory.
Roskill experts will answer your questions…
- How will China influence the market going forward?
- What effect could Fanya APT stockpiles have on global supply and prices?
- Which new projects are likely to come on-stream by 2026?
- What is the outlook for hardmetals, steel and superalloys, tungsten products, and chemicals?