LONDON, November 21, 2016 /PRNewswire/ --

Roskill is releasing its new report on Tungsten with forecasts to 2026 in the next month. It is essential reading for anyone requiring a comprehensive view of tungsten supply, demand, trade and prices.  

World production of tungsten concentrates is estimated to have fallen to nearly 78,500t of contained W in 2016, down from just over 82,000t the previous year. Although China - the world's largest primary tungsten producer - accounted for some 2,000t of this drop, there were also significant decreases from Canada, Australia and Russia due to mothballing or closure of some operations.

     (Logo: http://photos.prnewswire.com/prnh/20150909/264974LOGO )

Non-Chinese mine output accounted for just under 20% of primary tungsten supply in 2016, slightly lower than levels in 2015. While there have been new mining projects established in Vietnam, the UK and Spain in the last couple of years, increased production from these sources did not offset falls from established rest-of-world producers.

Lower concentrates output in 2016 has occurred against a backdrop of subdued prices. Output of tungsten concentrates in 2015 exceeded demand and consequently led to a build up of stocks and falling prices. Concentrate prices are discounted against the key tungsten intermediate, ammonium paratungstate (APT). It also experienced oversupply and stockbuilding in 2015, and prices dropped from a range of US$275-335/mtu^[1] at the start of 2015 to US$170-190/mtu in December that year. Factoring in the discount for concentrate, this is below the cost of production for many miners.

The start of 2016 saw the tungsten market being driven by inventories and low prices, as miners sold off high-cost stocks and produced to meet contractual agreements. The low APT price, although since recovering to US$198-203/mtu in early November, has meant that availability of tungsten concentrates from outside of China has been tight since mid-2016.

In the background of these supply and price swings, there has been growing demand for non-Chinese tungsten concentrates. This has been pushed by rest-of-world consumers attempting to gain more supply chain security, in an effort to avoid price rises similar to those in 2011. As a consequence, some processors have faced concentrate supply shortages and have looked to plug the gap by buying other tungsten intermediates such as oxides, or else by adapting their plants or increasing their use of tungsten waste and scrap.

Secondary tungsten supply 

Tungsten scrap is estimated to have contributed 35,000t of contained W to the global tungsten market in 2016, and is particularly important to tungsten consumption in Europe, Japan and North America. The scrap price varies according to its availability and purity, and also tracks against the performance of primary tungsten. In general, scrap is around US$14-15/kg, lower than the price for APT (approximately US$20/kg).

There are questions over its supply reliability, however. For example, the time lag between the end of life of a carbide tool and its arrival at the scrap recycler can be as high as six months. Scrap generators may hold onto material if they believe that the price will improve. In this sense, primary tungsten supply can be easier for processors to plan around compared to scrap sources.

Typically, scrap demand improves when primary tungsten prices are high as the more sophisticated tungsten separation processes for mixed scrap become economically viable. However, since the APT price peaks in 2011 and 2013 there have been greater moves by processors to utilise scrap - in spite of APT prices being at some of their lowest levels since 2009 - and internal recycling of scrap has increased.

Collection of waste and scrap is also improving. The tool sector has had good collection programmes in place for decades, whereas other sectors such as catalysts have been patchy depending on country. For example, recycling rates of solid carbide tools are very high at around 90%, but recycling rates of used chemicals is lower at around 10% globally.

In Roskill's opinion, scrap will play a greater role in global tungsten supply in the period out to 2026, as collection systems and recycling expertise improve in China and other countries. The industry has already seen the importance of secondary tungsten grow in a relatively short period; these sources accounted for around 10% of total tungsten supply in 2004, compared to over 30% in 2016. If reliance on primary tungsten continues to reduce, this may help to suppress tungsten price volatility in future.

Tungsten: Global Industry, Markets & Outlook, 12^th edition, 2016, is available for pre-orders from Roskill Information Services Ltd, 54 Russell Road, London SW19 1QL ENGLAND.

Note: 1-mtu refers to metric tonne unit, which is equivalent to 10kg

Email: info@roskill.com Web: http://www.roskill.com

SOURCE Roskill Information Services