After a relatively stable end to 2016, the tungsten market has seen a near continuous increase in prices for tungsten products during H1 2017, with European APT prices increasing from US$195/mtu WO3 to US$223/mtu WO3 in July. The Chinese domestic market has also shown similar price movements with tungsten concentrate prices increasing by 14% to RMB12,299/t (US$1,829/t) in July compared to RMB10,600/t (US$1,540/t) in January. Though prices have shown a significant recovery in H1 2017, it must be remembered that prices remain far below those observed between 2011 and 2014.
The closure of a number of smelters in China for the Chinese New Year towards the end of January created a slight tightness in the tungsten market, resulting in an up-tick in the APT price. The upward trend in APT prices was prolonged as some smelters delayed the restart of production amidst disputes with tungsten concentrate suppliers and supply availability remained tight. Smelters also took the closures as an opportunity to implement changes to meet new environmental legislation in China ahead of planned environmental inspections. Many leading tungsten producers reported increased guide prices for tungsten concentrates in April as supply remained tight. The start of Chinese environmental inspections in Q2 2017 led to an increasing number of smelters and processing facilities in the country suspending production, which coupled with growing domestic Chinese demand, saw prices increase further. As environmental inspections came to an end in July, restocking by producers pushed tungsten concentrate and APT prices higher, though it is considered likely that price increases will stabilise in Q3.
Disruptions to supply in the H1 2017 have been met with continued steady growth in demand for tungsten products, particularly in the North American and Russian markets. Growth in the US oil and gas industry in H1 2017 boosted tungsten demand for cemented carbide products, whilst Russian production of ferrotungsten increased over the same period. Demand is forecast to continue to grow steadily in the remainder of 2017, reaching over 105,000t W.
The Chinese Ministry of Industry and Information Technology reported an unchanged tungsten production quota for 2017, which maintained the largest allocations for Jiangxi and Hunan provinces. Outside of China, the EU implemented new laws requiring importers of tungsten minerals to complete due diligence on the origin of materials from ‘conflict affected areas’. Conversely the USA suspended Section 1502 of the Dodd-Frack Act which requires consumers to undertake due diligence on tungsten concentrates from conflict areas.