European ferro-tungsten price hits three-year high on threat of Russian tax

The European ferro-tungsten market rose over the week to Thursday July 8, with offer prices increasing rapidly on reduced spot availability in Europe and the prospect of Russia imposing an export tax from August 1.

Fastmarkets assessed the price of ferro-tungsten, basis 75% W, in-whs dup Rotterdam, at $37.75-38.50 per kg on July 7, up from the previous assessment of $35.60-37.00 per kg. The market was now at its highest since July 2018.

Producers in Russia have increased their offer prices gradually since the end of June, after the duties on ferro-alloy exports from Russia were announced.

On June 25, the Russian government approved temporary export duties on 340 steel and non-ferrous metals sold outside the Eurasian Economic Union (EAEU), which will be in effect from August 1 to December 31, according to an official government decree. The duty’s base rate will be 15%, with a specific minimum rate of $150 per tonne for ferro-alloys.

The upcoming tax has resulted in additional buying interest among traders, coupled with low inventories in Europe. This fresh demand has been especially evident over the past week, market sources said.

“Some traders are taking positions and building stocks ahead of the tax [being imposed] while suppliers are raising their offers amid very low inventories in Europe,” a Russian trader said.

Chinese producers were also offering higher prices, and the price differential between Chinese and Russian material has almost disappeared, with material from both regions offered at more than $38 per tonne, market sources said.

“The Chinese raised their prices overnight. They are happy to see prices going up now,” a trader in Europe told Fastmarkets. “It has yet to be seen what will happen in August when the tax is implemented, because they may try to gain market share by lowering their prices to keep Russia out of the market.”

But the increase was not only caused by the duty, with tighter concentrates supply from China continuing to support higher prices.

“Even before the news of the tax came into the game, producers were sold out,” a second European trader said. “It is very difficult to find material.”

In fact, many small-scale miners in China suspended their operations last year because of unfavorable prices that were very close to production costs. Sources said that some major tungsten companies in China had consumed most of their own concentrate output, leaving only small volumes available to the wider market.

“The company I work for raised offer prices for ferro-tungsten given the strengthened concentrate prices in China. It is quite difficult to source raw materials,” a producer source in China said.

Jiangxi Tungsten, a major producer of high-quality ferro-tungsten produced from concentrates, suspended operations at its ferro-tungsten plant ahead of China’s Labor Day holiday on May 1-5 and has not operated since then.

A source from Jiangxi Tungsten Group told Fastmarkets that its only ferro-tungsten plant has no plans to resume operations during the summer, and the company would only consides selling stocks if buyers could pay a suitable price.

The facility produced around 3,000-3,500 tonnes per year of ferro-tungsten and accounted for about 80% of China’s ferro-tungsten produced from concentrate.

There are other plants in China that produce the material from scrap, but the feedstock and production are not consistent, according to sources. There has been a severe scrap tightness in the market since last year, due to reduced global industrial activity caused by the Covid-19 pandemic.

The Jiangxi Tungsten shutdown has already been reflected in a decline in exports. In May, China exported 125.50 tonnes, down by 52.03% month on month, although up by 189% year-on-year, according to customs data.