Tungsten Market Anticipates New Supply

LONDON, November 8, 2011 -

Roskill Information Services - Tungsten: Market Outlook to 2016 (10th edition)

The tungsten market in the 1990s was characterised by oversupply from China and low prices, which meant that most western producers ceased production, as prices were well below costs of production.  However, in 2000, the Chinese government began the process of controlling its tungsten industry through the imposition of production and export quotas, and the removal of export rebates on tungsten products.

During these years of excess supply, stockpiles of tungsten were built up by producers and also governmental organisations.  These stockpiles overhung the tungsten market and tended to act as a brake on price rises.  Most of the material contained in these stockpiles has now been sold and trends in tungsten prices have correlated more closely to the underlying supply/demand fundamentals since 2005/2006.

Tungsten exhibits strong market fundamentals

The onset of the global recession in 2009 saw tungsten prices fall sharply.  Between the end of 2008 and beginning of 2010, prices for Chinese APT fell by just over 20%, with a similar fall in European prices.  Of this price fall, approximately 92% took place in the first half of 2009, with the second half of the year showing early signs of stability.  As the global economy started to improve from the fourth quarter of 2009, demand for tungsten also increased.  The general improvement in economic sentiment saw prices increase steadily throughout 2010 and the rise in prices accelerated in 2011 as supply of tungsten had struggled to meet the recovery in demand.

The relatively strong fundamental position in the tungsten market is illustrated when tungsten price trends are compared to trends in similar metals such as cobalt, nickel and molybdenum.  The fall in tungsten prices was significantly smaller in 2009 than for the other metals , with tungsten prices dropping a maximum of 25%, compared to 70% for nickel, 68% for molybdenum and 43% for cobalt (index = January 2007).  The recovery in tungsten prices since the credit crisis and economic recession in 2009 has also been much stronger.  While tungsten prices in July 2011 were at 180% of the level recorded in January 2007, prices for cobalt, nickel and molybdenum were all still below the levels of January 2007, with price indices of 64, 64 and 58 respectively.  This would seem to be a clear indication that supply of tungsten is relatively tight as prices held up when demand was depressed and have increased strongly now that consumption of tungsten has recovered to pre-crisis levels.

New tungsten projects look to ease the tight supply situation

Primary tungsten output increased steadily from 35,650t W in 1998 to just over 56,500t W in 2008, an average growth rate of 4.7%py.  Despite the steep drop in demand for tungsten in 2009 output of tungsten increased further to an estimated 61,500t W.  This was almost entirely due to an increase of 7,500t W in China, where consumption of tungsten continued to increase despite the economic problems elsewhere in the world.  Production jumped again to almost 70,000t in 2010 on the back of a further increase in Chinese output.

Historically, primary production has not been sufficient to supply market demand and has been supplemented by sales from stockpiles.  The largest of these stockpiles was located in the former Soviet Union, but is now thought to be exhausted.  The US strategic stockpile continues to be drawn down at the rate of around 2 - 3,000tpy.

The credit crisis and the subsequent economic recession in 2009 meant that most companies with tungsten projects in development had to take stock of the situation.  Funding for any project was difficult and even now there is a lot of competition for a finite ‘pot’ of finance.  As a result, the timeline for development for most of the major tungsten projects slipped by at least 12-18 months due to these funding delays.  From 2011, mine production of tungsten is likely to grow relatively strongly as a number of tungsten projects are due to come on-stream after being delayed by the credit crisis.  The majority of the new projects are scheduled to come on stream between 2013 and 2015, but it is always possible that these timelines could slip further meaning that the significant increase in tungsten output would come in the 2014 to 2016 period.  Roskill forecasts that mine output of tungsten could grow from 72,000t W in 2011, to around 100,000t W by 2016.

Tungsten prices may not have peaked

Tungsten prices rose strongly throughout 2010 and most of 2011, as most of the economies outside China recovered from the credit crisis-induced recession and demand for tungsten increased in parallel.  At the end of September 2011, prices for Chinese APT had reached US$450-460/mtu, compared to US$330/mtu at the beginning of the year and US$200/mtu at the beginning of 2010.  APT prices are now well above the previous peak of US$300/mtu in June 2005.

Roskill expects to see a market fluctuating around an equilibrium level, but forecasts the market to be in deficit in both 2011 and 2012, before new supply enters the market.  Currently, Roskill expects 2013 to be the tipping point where supply overtakes demand in the tungsten market at some point during the year.  Assuming that the majority of planned projects reach production, then a surplus is expected to develop, although any further delays to new supply entering the market would quickly see a deficit forming and prices would remain higher than in the forecast (probably into 2014).

Given the current levels of APT prices, Roskill expects that the average for the whole of 2011 will rise to a forecast US$430mtu by the end of the year.  Very few of the significant new tungsten projects are expected to deliver any substantial tonnages of tungsten in 2012, so the market will be relying on existing producers to cope with any growth in demand.  As a result, Roskill predicts a further tightening in supplies of tungsten and, therefore, further price rises, with an average APT price of US$475/mtu.

Prices are expected to ease between 2013 and 2015 as the bulk of planned new tungsten production capacity is expected to enter the market.  Demand for tungsten is expected to continue to grow to 2016 and beyond, putting further pressure on the supply side and requiring more new capacity.

Tungsten: Market outlook to 2016, 10th edition is available at £4500 / US$7500 / €5900 from Roskill Information Services Ltd, 54 Russell, London SW19 1QL, England. Tel: +44-20-8417-0087. Fax +44-20-8417-1308 Email: info@roskill.co.uk Web: www.roskill.com/tungsten

Note to editors

The report contains 230 pages, 130 tables, 49 figures. It provides a detailed review of the industry, with subsections on the activities of the leading producing companies. It also analyses consumption, trade and prices.

For further information or a review copy of this report, please contact Mark Seddon (mark@roskill.co.uk). To receive press releases via email, please contact Prakash Ramachandran (prakash@roskill.co.uk).

    Table of Contents

    1                 Summary
    1.1               Production
    1.2               Consumption
    1.3               Prices and market outlook

    2                 Introduction to tungsten
    2.1               Tungsten occurrence and reserves
    2.1.1             Occurrence
    2.1.2             Reserves
    2.2               Tungsten mining, processing and products
    2.2.1             Tungsten ores and concentrates
    2.2.2             Ammonium paratungstate (APT)
    2.2.3             Tungsten oxides and trioxide
    2.2.4             Tungstic acid
    2.2.5             Tungsten metal powder
    2.2.6             Tungsten carbide powder (WC)
    2.2.7             Ferrotungsten
    2.2.8             Tungsten melting base
    2.2.9             Other tungsten chemicals
    2.3               Tungsten applications
    2.3.1             Cemented carbides (hardmetals)
    2.3.2             Alloy steels
    2.3.3             Fabricated tungsten products
    2.3.4             High performance alloys/superalloys
    2.3.5             Heavy tungsten alloys and other alloys
    2.3.6             Tungsten chemicals
    2.3.7             Tungsten substitution and recycling

    3                 World production and supply of primary tungsten
    3.1               Mine production and capacity
    3.2               Outlook for production and supply of tungsten
    3.3               Tungsten production costs

    4                 Review of tungsten projects, mining and processing by
                       country
    4.1               Australia
    4.1.1             Production of tungsten in Australia
    4.1.2             Tungsten projects in Australia
    4.1.2.1           Icon Resources - Mount Carbine
    4.1.2.2           Deutsche Rohstoff AG - Wolfram Camp
    4.1.2.3           Thor Mining Pty Limited - Molyhil
    4.1.2.4           King Island Scheelite Limited (KIS) - Dolphin Project
    4.1.2.5           Vital Metals Limited - Watershed
    4.1.2.6           Hazelwood Resources - Big Hill
    4.1.2.7           Venture Minerals Ltd. - Mt. Lindsay Tin-Tungsten
                       Project
    4.1.2.8           Newcrest Mining Ltd. - O'Callaghans
    4.2               Austria
    4.2.1             Production of tungsten ores and concentrates in Austria
    4.2.1.1           Wolfram Bergbau und Hütten GmbH (WBH)
    4.2.2             Production of tungsten products in Austria
    4.2.2.1           Plansee Group
    4.2.2.2           Treibacher Industrie AG
    4.2.2.3           Wolfram Bergbau und Hütten GmbH (WBH)
    4.2.3             Imports and exports of tungsten to and from Austria
    4.3               Belgium
    4.3.1             Imports and exports of tungsten to and from Belgium
    4.4               Bolivia
    4.4.1             Production of tungsten in Bolivia
    4.4.2             Producers of tungsten in Bolivia
    4.5               Brazil
    4.5.1             Production of tungsten in Brazil
    4.5.2             Producers of tungsten in Brazil
    4.5.3             Tungsten projects in Brazil
    4.5.4             Imports and exports of tungsten to and from Brazil
    4.6               Canada
    4.6.1             Reserves of tungsten in Canada
    4.6.2             Producers of tungsten in Canada
    4.6.2.1           North American Tungsten Corporation Limited (NATC)
    4.6.3             Tungsten projects in Canada
    4.6.3.1           Sissons (Northcliff Resources/Geodex Minerals)
    4.6.3.2           Northern Dancer (Largo Resources)
    4.6.3.3           Mactung (North American Tungsten)
    4.6.3.4           Other projects
    4.6.4             Producers of tungsten products in Canada
    4.6.5             Suppliers of tungsten in Canada
    4.6.6             Imports and exports of tungsten to and from Canada
    4.7               China
    4.7.1             Tungsten deposits in China
    4.7.2             Reserves of tungsten in China
    4.7.3             Production capacity of tungsten mines in China
    4.7.4             Production of tungsten in China
    4.7.5             Production of tungsten in China by province
    4.7.6             Tungsten production quotas in China
    4.7.7             Producers of mined tungsten and tungsten products in
                       China
    4.7.7.1           China Minmetals Corporation
    4.7.7.2           Chongyi Zhangyuan Tungsten Company Limited
    4.7.7.3           Dayu Weiliang Tungsten Company Limited
    4.7.7.4           Guangdong Rising Nonferrous Metals Group
    4.7.7.5           Hunan Chenzhou Mining Group
    4.7.7.6           Hunan Nonferrous Metals Holding Group (HNG)
    4.7.7.7           Jiangxi Tungsten Industry Group (JTGC)
    4.7.7.8           Jiangxi Xianglushan Tungsten Co. Ltd.
    4.7.7.9           Jiangxi Yaosheng Industry and Trade Development Company
    4.7.7.10          Xiamen Tungsten Co. Ltd. (XTC)
    4.7.7.11          Zhuzhou Cemented Carbide Group (ZCC)
    4.7.8             Import and exports of tungsten to and from China
    4.8               Czech Republic
    4.8.1             Producers of tungsten products in the Czech Republic
    4.8.1.1           Global Tungsten & Powders (formerly Osram Bruntál)
    4.8.1.2           Metal-Tech Cz
    4.9               France
    4.9.1             Producers of tungsten products in France
    4.9.1.1           Cime Bocuze (Plansee Tungsten Alloys)
    4.9.1.2           Eurotungstène Poudres (ETP)
    4.9.1.3           Technogenia
    4.1               Germany
    4.10.1            Producers of tungsten products in Germany
    4.10.1.1          Element Six (E6) Hard Materials (formerly Barat
                       Carbide)
    4.10.1.2          H. C. Starck
    4.10.2            Other producers of tungsten products in Germany
    4.11              India
    4.11.1            Resources of tungsten in India
    4.11.2            Former production of tungsten in India
    4.11.3            Production of secondary tungsten in India
    4.11.4            Consumption of tungsten in India
    4.11.5            Importers of tungsten in India
    4.12              Israel
    4.13              Japan
    4.13.1            Former production of tungsten in Japan
    4.13.2            Production of tungsten products in Japan
    4.13.3            Producers of tungsten products in Japan
    4.13.3.1          ALMT Corporation
    4.13.3.2          Japan New Metals Company
    4.13.3.3          Nippon Tungsten Company Limited
    4.13.3.4          Sumitomo Corporation
    4.13.3.5          Toho Kinzoku Company Limited
    4.13.3.6          Toshiba Materials Company Limited
    4.13.3.7          Tungaloy Corporation
    4.13.4            Other companies producing tungsten products in Japan
    4.13.5            Strategic stocks of tungsten in Japan
    4.13.6            Imports of tungsten into Japan
    4.13.7            Exports of tungsten from Japan
    4.14              Kazakhstan
    4.15              Kyrgyzstan
    4.16              North Korea
    4.17              South Korea
    4.17.1            Producers of tungsten products in South Korea
    4.17.2            Tungsten projects in South Korea
    4.17.2.1          Woulfe Mining Corp. - Sangdong Tungsten-Molybdenum
                       Project
    4.18              Luxembourg
    4.19              Mexico
    4.2               Mongolia
    4.20.1            Production of tungsten in Mongolia
    4.21              Myanmar
    4.21.1            Production of tungsten in Myanmar
    4.22              Netherlands
    4.22.1            Producers of tungsten products in the Netherlands
    4.22.1.1          Philips Lighting Components (LiComp)
    4.23              Peru
    4.23.1            Producers of tungsten ores and concentrates in Peru
    4.23.1.1          Malaga Inc. (formerly Dynacor)
    4.23.2            Former producers of tungsten in Peru
    4.24              Portugal
    4.24.1            Production of tungsten in Portugal
    4.24.2            Producers of tungsten in Portugal
    4.24.2.1          Sojitz Beralt Tin & Wolfram (Portugal) SA
    4.25              Russia
    4.25.1            Reserves of tungsten in Russia
    4.25.2            Production of tungsten in Russia
    4.25.3            Tungsten mine producers in Russia
    4.25.3.1          Primorsky GOK
    4.25.3.2          Novo-Orlovsky GOK
    4.25.3.3          Lermontovsky Mine
    4.25.3.4          Potential tungsten mine production
    4.25.4            Producers of tungsten products in Russia
    4.25.4.1          Wolfram Company CJSC
    4.25.4.2          Kirovgrad Hard Alloy Plant (KZTS)
    4.25.5            Exports of tungsten from Russia
    4.26              Rwanda
    4.27              Spain
    4.27.1            Production of tungsten in Spain
    4.27.1.1          Heemskirk Consolidated Limited/Almonty Industries Inc.
                      (Los Santos)
    4.27.2            Tungsten projects in Spain
    4.27.2.1          Ormonde Mining (Barruecopardo)
    4.28              Sweden
    4.28.1            Producers of tungsten products in Sweden
    4.28.1.1          Sandvik AB
    4.29              Taiwan
    4.3               Tajikistan
    4.31              Thailand
    4.32              UK
    4.32.1            Tungsten projects in the UK
    4.32.1.1          Wolf Minerals - Hemerdon Ball
    4.32.2            Producers of tungsten products in the UK
    4.32.2.1          A & M. Group
    4.32.2.2          ATI Garryson
    4.32.2.3          M&I Materials Group
    4.32.2.4          Tungsten Alloys (Mfg) Limited
    4.32.3            Former producers of tungsten products in the UK
    4.33              Ukraine
    4.34              USA
    4.34.1            Tungsten projects in the USA
    4.34.1.1          EMC Metals Corp. (formerly Golden Predator Mines Inc.)
                       - Springer
    4.34.1.2          Galway Resources Limited - Victorio
    4.34.1.3          Black Fire Minerals - Pilot Mountain
    4.34.2            US production, consumption and trade in tungsten
                       concentrates
    4.34.3            US production, consumption and trade in APT
    4.34.4            US consumption and trade in secondary tungsten
    4.34.5            Producers of secondary tungsten in the USA
    4.34.5.1          Hi-Temp Specialty Metals Incorporated
    4.34.5.2          Martin Alloys Corporation
    4.34.6            Producers of tungsten products in the USA
    4.34.6.1          American Elements
    4.34.6.2          ATI Metalworking Products
    4.34.6.3          Buffalo Tungsten
    4.34.6.4          Elmet Technologies Limited
    4.34.6.5          General Electric
    4.34.6.6          H.C. Starck
    4.34.6.7          Hogen Industries Incorporated
    4.34.6.8          Hydro Carbide Incorporated
    4.34.6.9          Inframat Corporation
    4.34.6.10         Kennametal Incorporated
    4.34.6.11         Osram Sylvania Products Incorporated
    4.34.6.12         Phelly Materials Incorporated
    4.34.6.13         Tundra Composites LLC
    4.34.6.14         Tungsten Heavy Powder Incorporated
    4.34.7            Other producers of tungsten products in the USA
    4.34.8            Former producers of tungsten products in the USA
    4.34.8.1          Avocet Mining
    4.34.8.2          OM Group
    4.34.9            US year end stocks of tungsten products
    4.34.10           US Defense National Stockpile
    4.34.11           Imports and exports of tungsten to and from the USA
    4.35              Uganda
    4.36              Uzbekistan
    4.37              Vietnam
    4.37.1            Production of tungsten products in Vietnam
    4.37.1.1          Youngsun Tungsten Industry Co. Ltd.
    4.37.2            Tungsten projects in Vietnam
    4.37.2.1          Masan Group - Nui Phao
    4.37.2.2          Asia Tungsten Products Company (ATC) Ltd. - Vihn Bao
                      Ferrotungsten

    5                 International trade in tungsten
    5.1               Trade in tungsten ores and concentrates
    5.2               Trade in tungsten intermediates
    5.2.1             Trade in tungstates
    5.2.2             Trade in tungsten oxides and hydroxides
    5.2.3             Trade in ferrotungsten
    5.3               Trade in tungsten carbide
    5.4               Trade in semi finished tungsten products
    5.4.1             Trade in tungsten powder
    5.4.2             Trade in tungsten waste and scrap

    6                 World consumption of tungsten
    6.1               Consumption of tungsten by country/region
    6.1.1             Consumption of tungsten in China
    6.1.2             Consumption of tungsten in Japan
    6.1.3             US consumption of primary tungsten products
    6.1.3.1           US consumption of primary tungsten products by end use
    6.2               Consumption of tungsten by end-use
    6.3               Outlook for tungsten consumption
    6.3.1             Outlook for tungsten consumption by country/region
    6.3.2             Outlook for tungsten consumption by end-use

    7                 End-uses for tungsten
    7.1               Tungsten in cemented carbides
    7.1.1             Use of tungsten in cemented carbides
    7.1.2             Carbide cutting tool design
    7.1.3             Applications for cemented carbides
    7.1.4             Production of cemented carbides
    7.1.4.1           Production of cemented carbides in China
    7.1.4.2           Production of cemented carbides in the USA
    7.1.4.3           Production of ultra-hard tools in Japan
    7.1.4.4           Production of cemented carbides in Europe
    7.1.5             Consumption of tungsten in cemented carbides
    7.1.6             Outlook for cemented carbides
    7.2               Tungsten in alloy steels and superalloys
    7.2.1             Tungsten in alloy steels
    7.2.1.1           Tool steels
    7.2.1.2           Stainless steel
    7.2.1.3           Heat resisting steel
    7.2.1.4           Full alloy steels
    7.2.2             Tungsten in high performance alloys/superalloys
    7.2.2.1           Types of high performance alloy
    7.2.2.2           High performance alloy processing technology
    7.2.2.3           Consumption and markets for high performance alloys
    7.2.3             Consumption and outlook for tungsten in alloy
                       steels/superalloys
    7.3               Tungsten in fabricated products
    7.3.1             Markets for fabricated tungsten products
    7.3.1.1           Filaments and electrodes in electric lamps
    7.3.1.2           Lighting glass manufacturers
    7.3.1.3           Fabricated tungsten products in the automotive industry
    7.3.2             Consumption of tungsten in fabricated tungsten products
    7.4               Tungsten in other applications
    7.4.1             Tungsten in heavy tungsten alloys and other tungsten
                       alloys
    7.4.1.1           Tungsten heavy alloys
    7.4.1.2           Welding and hard-facing alloys
    7.4.1.3           Refractory alloys
    7.4.1.4           Consumption of tungsten in heavy tungsten alloys and
                       other tungsten alloys
    7.4.2             Tungsten in tungsten chemicals
    7.4.3             Outlook for tungsten in other applications

    8                 Tungsten prices
    8.1               Recent price trends for tungsten
    8.2               Future outlook for tungsten prices

.