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Soaring prices for tungsten concentrates in China have been flagged as the trigger for an upturn in European tungsten prices, with marked rises in the prices of ammonium paratungstate (APT) and ferro-tungsten in Europe during the week ended Friday April 26.
Fastmarkets’ twice-weekly price assessment for ferro-tungsten, basis 75% W, in-whs dup Rotterdam, was $42.10-43.80 per kg W on Friday, up by 2.26% from the previous assessment on April 24.
Week on week, the price was up by 6.36%, while year on year the rise was 14.2%. In the latest assessment, the in-warehouse Rotterdam ferro-tungsten price was at its highest since May 2022.
Prices in this market in particular have shown varying degrees of fluctuation over the course of 2024 so far, with input costs in China often cited among the key reasons for price increases, while poor end-user demand has capped the upside.
“It’s finally happened. We were expecting this for the full [first] quarter. Finally, the market is digesting [the rise in concentrates prices],” a trader said. “We also see growing demand. We see consumption being better than last year and we see limited inventories.”
Although high concentrates prices in China may have been the initial spark, other factors have fanned the flame.
The latest price rises in the country have come at a time when demand in Western markets has also been picking up, with buying activity perhaps beginning to outstrip supply, market sources have suggested.
“Currently, due to the recovery of demand and the rise in prices, the global industrial chain will gradually replenish an appropriate amount of inventory. However, the output of tungsten per unit time is relatively fixed, which creates an imbalance between supply and demand, leading to an increase in prices,” a supply-side source said.
“There is currently a situation where the demand for replenishing inventory and the demand for expanding application areas overlap, such as tungsten cutting lines used in the photovoltaic field,” the same source added.
With mounting geopolitical tensions and regional conflicts in various areas, tungsten’s defense applications have also been cited among reasons for an increase in demand.
“The future for ferro-tungsten, in my opinion, is pretty bright. The only sector that is going well in Europe now is defense,” a second trader told Fastmarkets.
The same source flagged the war in Ukraine as one reason why some European countries may look to restock materials including tungsten, as well as the sanctions on imports of ferro-tungsten from Russia, leading to the growing dominance of the supply from China.
“I see an improvement in demand, then we’ll see what happens on the supply side,” the second trader said.
“We’ve been having a discussion in the market for a long time about the defense industry, which is a main driver for tungsten consumption. We didn’t see that last year, but maybe that’s what we see now – a slow recovery,” the first trader added.
The cheaper units that arrived at the end of December have now been depleted, according to the first trader, and this could also contribute to an increase in the cost of replacement.
The sustainability of the price rise for ferro-tungsten will also depend on whether demand remains strong in Europe, a third trader said.
“There is very little material in the market, but also quite a few consumers covered their requirements. So, it will depend on new demand coming in to support the higher prices,” he said.
He added, however, that he had seen an uptick in demand in recent days, with some consumers bringing forward their requirements for material.
APT prices showed a prolonged period of stagnation during 2023 and into early 2024, linked mainly to destocking activity, with an extremely quiet spot market.
Fastmarkets’ latest weekly price assessment on April 24 for tungsten APT 88.5% WO3 min, cif Rotterdam and Baltimore, duty-free, was $310-339 per mtu WO3, up by 3.02% week on week. But movement in this market only began to emerge at the end of March.
Before that, the price had remained in the region of $300-325 per mtu WO3 between November 17 and March 22, with almost no spot activity reported during that period.
Since then, however, spot activity has begun to pick up again.
“Now we see demand slowly improving, with depleted stocks,” a buy-side source said. “Customers tend to double-order, which causes increasing demand.”
With buyers now looking to replenish their depleted stocks at a time when raw materials costs have been soaring, and the availability of these raw materials has been declining, suppliers have faced challenges in keeping up with orders.
Growth in the amount of material requested in the spot market meant that even producers may need to buy-in material to meet demand. This also contributed to the upside for APT prices in particular, the supply-side source told Fastmarkets.
“After product sales, it is difficult to purchase tungsten raw materials to create the product at the same affordable price, or at the same cost level. Therefore, the [sales] price also includes a cost-increase factor, a supply-tension factor against demand, and market conditions [at the time of] conclusion,” the supply-side source added.
Other costs such as sea freight, insurance, transportation from plant to sea port, handling fees for loading into containers, customs clearance fees and interest fees also need to be taken into consideration, according to the supply-side source. These may also contribute to cost support for APT prices on a CIF Rotterdam or Baltimore basis.
Tungsten concentrates prices in China remained within relatively tight ranges over the course of 2023, without any major spikes, but began to rise gradually at the end of the year and into 2024, before showing significant rises beginning in April.
Tight spot availability in the country has been cited as the main driver for the rises, with further support from a combination of production cuts, stricter environmental supervision in mining areas, regional conflicts around the world, and the growing demand from the photovoltaic and manufacturing industries.
In Fastmarkets’ most recent assessment on April 24, the price of tungsten concentrate 65% WO3, in-whs China, was 134,500-138,000 yuan ($18,500-18,982) per tonne, up by 3.22% week on week.
Month on month, the price was up by 7.28%, and year on year the rise was 12.1%. The latest increase put the price at its highest level since September 2013.
Indeed, the availability of material has now become so tight that suppliers have been reported to be looking to overseas markets to fill gaps.
“Scrap and concentrates in overseas markets are both in very tight supply, and we are also purchasing tungsten raw materials from overseas markets to make up for the supply gap in the domestic market in China,” the supply-side source said.
But cautious sentiment in China has begun to emerge recently, with some market participants questioning whether the upside will be sustainable over the longer term.
“Despite the tight spot availability of upstream tungsten concentrates, it is quite hard to say whether the China tungsten market will maintain its upward momentum in May, because some tungsten stockholders may destock [if] the prices stop rising,” a China-based tungsten trader said.
But the end may not yet be in sight for concentrates price rises in China, with support also coming from higher long-term contract offers from major tungsten producers in the country during the latest pricing session.
“Following Jiangxi Tungsten’s first-grade tungsten concentrates long-term contract offer at 135,000 yuan per tonne in April, I heard that even spot tungsten concentrate offers have increased [further], and domestic APT offers were forced to go up [as well],” a second China-based tungsten trader said. “But to my knowledge, actual deals are mostly made on a long-term contract basis.”
“Tungsten prices have risen like crazy recently,” a third China-based tungsten trader added, “but even if many tungsten market participants feel that this rising trend is not rational, the upward momentum has not stopped so far.”
Downstream markets have not seen the same major upward momentum, however, with comparatively modest movement in recent weeks, following periods of stability that had lasted for several weeks – months, in the case of APT – into the end of 2023 and the beginning of 2024.
“The main downstream tungsten alloys demand has not shown any obvious improvement,” the second China-based trader said.
Fastmarkets’ weekly price assessment for tungsten APT, 88.5% WO3 min, fob main ports China, was $310-320 per mtu WO3 on April 24, up by 1.29% week on week, and by 2.44% month on month. The price had stayed at $305-310 per mtu WO3 between February 21 and April 3.
Also on April 24, Fastmarkets’ weekly price assessment for ferro-tungsten, export, min 75%, fob China, was $41.50-43.00 per kg W, up by 1.2% week on week and by 3.05% month on month.
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