A new report by Roskill states that the possible uptake of electric vehicles over internal combustion engines may mean tungsten prices and consumption in the automotive sector never recover to 2017 levels.
The document recalls how four years ago, upstream and refined tungsten supplies were substantially interrupted when the Chinese government launched a widespread program of environmental reforms, which impacted tungsten mine and smelter sites and pushed ammonium paratungstate (APT) prices to several-year highs, including European APT prices peaking at $350/mtu in June 2018.
At the same time, market sentiment remains subdued by the ongoing trade dispute between the US and China, since the phase one trade deal signed in January 2020 does not remove the majority of tariffs the US has placed on Chinese goods, affecting a host of tungsten products.
THE AUTOMOTIVE SECTOR CONTRIBUTES TO AROUND 30% OF TOTAL TUNGSTEN CONSUMPTION AND GLOBAL VEHICLE PRODUCTION IS ESTIMATED TO HAVE FALLEN 9% Y-O-Y BETWEEN 2019 AND 2020
Last year, “the European APT quotation peaked at $243/mtu in February, remaining at this level until April. As ‘lockdown’ restrictions were imposed on large parts of the world, tungsten prices began to fall, with the European APT quotation bottoming out $208/mtu in July,” the report reads. “Several key end-use demand sectors have suffered from the impacts of the pandemic, with the automotive and aerospace sectors bearing the brunt of this.”
Roskill data show that the automotive sector contributes to around 30% of total tungsten consumption and global vehicle production is estimated to have fallen 9% y-o-y between 2019 and 2020, while in the aerospace sector, global commercial aircraft deliveries fell approximately 40% y-o-y between 2019 and 2020.
“Prices have largely recovered from the July 2020 low, closing out 2020 at $233/mtu. Prices have continued to rise, despite escalating covid-19 cases, as much of the world is suffering from second or third waves of the pandemic,” the report reads.
“Unlike in Q2 2020, tungsten demand remains largely uninterrupted with steady manufacturing levels and the rolling out of several vaccines, however, uncertainty remains across the sector.”
For the industry to work on long-term growth, it will have to target first-use sectors, Roskill says.
Such clients are to be found in companies producing superalloys and other alloys, which are set to drive steel and alloys demand. Similarly, in the chemicals sector, the use of semiconductors and demand for consumer electronics is expected to enter another period of promising demand and, thus, tungsten producers ought to be looking at this area, as well as at the cemented carbides sector.
“In addition, there are opportunities further up the supply chain for new mine projects to come online. Several large mines in China and Russia are reaching their end of life and will need to be replaced for the market to remain adequately supplied,” the analysis forecasts.
Fonte: Mining.com
