PRICING NOTICE: Conclusions from Metal Bulletin’s market consultation on tungsten pricing

Metal Bulletin has reviewed the feedback received as part of its tungsten pricing consultation, launched in May this year.

Feedback was invited by Friday September 8.

Broadly, the aims of the consultation were as follows: 

  • To research and refine specifications for new reference prices for tungsten concentrates and tungsten scrap 
  • To evaluate the possibility of launching a derived cost of production for ammonium paratungstate, using upstream tungsten prices and assessed production costs. 
  • To identify the most appropriate methodological approach for price discovery in these markets.

Full details of the tungsten pricing consultation can be found here.

Below, Metal Bulletin outlines the feedback and next steps taken with regard to the launch of tungsten concentrates and tungsten scrap prices, and a derived cost of production for APT.

The findings of the tungsten pricing consultation were also outlined during a web seminar on Wednesday October 4. 

Tungsten concentrates
Respondents in favour of the launch of a reference price for tungsten concentrates argued that existing pricing mechanisms, namely, a discount to the APT price, are outdated, and fail to take account of the individual supply-demand fundamentals of the concentrates market.

As a result of this disconnect, a growing spot market has emerged for tungsten concentrates, with sellers feeling they can achieve higher prices for their material outside the APT-linked price structure, respondents said. This growing spot market, it was argued, would provide the basis for a new reference price.

Those against the launch of a standalone tungsten concentrates price felt that the spot market was still too small to provide enough liquidity for a robust reference. They added that tungsten concentrates are too diverse of a material, with wide variations in specification, to provide a useful pricing tool.

Others argued that the differing fundamentals of the concentrates and APT market were temporary, and that current pricing mechanisms – a link to the intermediates market – were sufficient.

Some were concerned that their position might be exposed, and that a tungsten concentrates price would provide too much transparency.

It was concluded that there was sufficient interest in a standalone tungsten concentrates price to warrant regular price discovery – in order to test concerns over liquidity – and research into the most suitable specifications.

Metal Bulletin was able to capture two to three transactions a week, alongside bids, offers and assessments.

Data was collected for tungsten concentrates with WO3 content below 50% and in excess of 70%. The spot market was found to be reflective of the merchant market, predominantly African material with WO3 content of 50-60%.

Nonetheless, the starting point for negotiations and discussions in the spot market remains for tungsten concentrates with a minimum WO3 content of 65%, and low levels of impurities.

Next steps
In light of the feedback received as part of the tungsten pricing consultation, and the results of its own price discovery, Metal Bulletin will launch a cif Europe tungsten concentrates index on Friday January 5, 2018.

Metal Bulletin will engage its index methodology in order to take account of the wide variation in tungsten concentrates sold in the spot market. Different grades of tungsten concentrates will be normalised to a base specification, and a tonnage weighted average will be used to generate a single-figure reference price.

Metal Bulletin’s index methodology screens outliers and applies a quantity weighted model to ensure that its tungsten concentrates index will be the most robust in the industry.

Weighting is given to concluded trades, in preference to bids, offers, deals reported second hand, and assessments.

This approach has been applied with success to a number of complex markets in recent years, including copper concentrates, manganese ore and iron ore.

Metal Bulletin has no financial interest in the level or direction of the index.

The following base specifications for the tungsten concentrates index have been devised in consultation with those active in the spot market.

Tungsten concentrates index, cif Europe
Units: $/mtu
Base chemical specification: WO3: 65% min; Sn: 5% max; Fe: 3% max; SiO2: 3% max; S: 1.5% max; Pb: 1% max; Mo: 0.2% max; As: 0.15% max; Sb: 0.01% max; Cd: 0.005% max; Be: 200ppm max; U: 100ppm max; Th: 100pm max (other grades normalised)
Delivery: cif Rotterdam (other ports normalised)
Trade size: minimum 18 tonnes
Loading window: Loading within one month
Payment terms: Cash against documents
Publication: weekly on Fridays, between 2pm and 3pm London time

It is understood that these specifications reflect the most common starting point for negotiations for spot purchases, and would be of greatest utility to those engaged in the spot market.

However, Metal Bulletin is seeking feedback on the base specifications outlined above and may further refine the specification before the launch of the index in January next year.

Metal Bulletin invites feedback on the base specification by Monday November 6.

Metal Bulletin will review the feedback and publish final specifications on Monday December 4.

Metal Bulletin will publish its tungsten concentrates index, alongside price history, from Friday January 5.

Data contributed to the tungsten concentrates index will not be included in the tungsten trade log, in order to address concerns over market transparency.

To provide feedback on the proposed base specifications for the tungsten concentrates index, or if you would like to provide price information by becoming a data submitter to the index, please contact Charlotte Radford by email at: Please add the subject heading FAO: Charlotte Radford, re: Tungsten pricing consultation.

Tungsten scrap

As with the tungsten concentrates market, respondents identified that the tungsten scrap market can operate with different supply-demand fundamentals to other tungsten products. Respondents added that there was an active tungsten scrap market which could provide a firm basis for a reference price (or prices), and that scrap was increasingly being used to feed APT production.

Most agreed that price quotations for tungsten scrap would be a welcome addition to Metal Bulletin’s suite of prices, but added that the scrap market was too diverse to identify a standard specification.

It was found that the scrap market was felt to be a product market, with prices agreed on a case-by-case basis, rather than starting negotiations with a clear specification in mind (as was found to be the case for concentrates).

Next steps
Given the largely positive response to the suggestion to launch scrap prices, Metal Bulletin will continue to research the most appropriate specification for tungsten scrap prices and best way to capture the spot market.

Metal Bulletin will engage directly with those active in the spot tungsten scrap market and research will continue to centre on defining a specification for material feeding directly into the APT production process.

Derived APT production cost

Those in favour of the launch of a derived production cost for APT argued that a new reference price was required for the tungsten industry, which would take into account the underlying raw material prices and costs incurred by integrated companies.

Respondents against the proposal highlighted anti-trust, price-fixing concerns within a small, integrated market. It was also raised that, in contrast with scrap and concentrates, it would not be possible to verify the processing costs reported by a data submitter with a buyer and a seller.

Feedback was weighted against the proposal to launch a derived production cost for APT.

It was found that different companies account for their production costs in different ways, creating – in addition to price-fixing concerns – challenges with the creation of a uniform specification against which to provide an assessment of processing costs.

Metal Bulletin investigated to see whether it would be possible to report a “tolling charge” for the processing of raw materials into APT. Since the tolling charge is agreed by a buyer and a seller, this would address concerns over price fixing.

It was concluded that it would not be possible to launch an assessment of tolling charges since third-party tolling has become a rarity in recent years as a result of market integration and squeezed margins.

Metal Bulletin engaged its analyst colleagues from Metal Bulletin Research to review whether it would be feasible to launch a tungsten cost service (as has been the case for the steel market). This approach would see Metal Bulletin analysts engage with APT producers and use third-party indices to create an average cash cost for APT production.

Next steps
Given the muted reaction from respondents to the tungsten pricing consultation in relation to the derived production cost for APT, priority is being given to the launch of the tungsten concentrates index, followed by tungsten scrap.

Due to limited interest, Metal Bulletin will not actively pursue the option for a tungsten cost service – with the support of Metal Bulletin Research – at present.

Metal Bulletin remains open to producing a derived, all-in production cost for APT, should greater demand materialise.

There is no change to Metal Bulletin’s existing price assessments for APT (Europe and China), tungsten concentrates (China) and ferro-tungsten (Europe, China and the USA) in light of this pricing notice.

To provide feedback on any of the points raised above, please contact Charlotte Radford by email at: Please add the subject heading FAO: Charlotte Radford, re: Tungsten pricing consultation.

The deadline for feedback on the base specification for the tungsten concentrates index specifically is Monday November 6. Please contact Charlotte Radford by email at: to provide feedback.

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