Roskill:Is tungsten heading for a deficit in 2019?

Tungsten’s reputation as a stable metal was turned on its head in late 2017 and early 2018, as the Chinese government implemented far-reaching environmental reforms across its major commodity sectors.


London, UK, April 25, 2019 (GLOBE NEWSWIRE) --  
Tungsten is typically referred to as an industrial metal, owing to its primary use in tool materials. This has traditionally made tungsten a fairly stable market, growing in line with GDP and manufacturing activity. 

New regulations saw environmental patrols occur across the tungsten-producing hubs of Jiangxi, Hunan and Fujian. Where inspectors found infractions, the companies were taken offline while operations were made compliant, e.g. ammonium paratungstate (APT) slag heaps were safely disposed of. Where major investments were required, some companies were allowed to return to production on the expectation that operations would be made compliant over the course of the next 1-2 years.


This occurred against a backdrop of positive tungsten market demand, which recovered very strongly to record a 5% y-on-y increase in 2018. The rise in consumption, during a period of supply disruptions from the major Chinese producers, saw prices recover to four-year highs – peaking at US$350/mtu in June 2018. The return of mines and smelters to the market in the second half of 2018, coupled with concerns around the US-China trade talks and a seasonal slowdown, saw prices skirt below US$300/mtu in September 2018. This downwards trajectory continued into January, before prices stabilised in March 2019 at around US$275/mtu, where they remain in April 2019.


In the short-term, the tungsten price is expected to recover in line with continued demand growth. In particular, use of tungsten finished products within electronics, oil and gas, aerospace, construction and mining applications, looks set to grow strongly.


Roskill believes there is potential for a supply deficit in 2019 and 2020 as output from existing mines looks set to decline; ore grades at some of the larger and older Russian and Chinese mines are falling as resources become depleted. Importantly, there are no plans in China to bring online new tungsten mines to replace these depleted deposits.


It will therefore be up to the rest of the world to plug this potential supply deficit; the most advanced mine projects are Saloro’s Barruecopardo project and W Resources’ La Parrilla project, both located in Spain, which are on track to start concentrates production in the first half of this year. The next wave of developers includes Australia’s King Island Scheelite, which recently announced an offtake agreement with tungsten refiner Wolfram Bergbau und Huetten for its Dolphin project, and Almonty Industries, which in March 2018 secured a 10-year offtake for its Sangdong project in South Korea.


Although there are reports of sizeable scrap stockpiles in the market as of April 2019, Roskill expects these to be consumed during the course of the year. APT prices are, therefore, expected to rise during Q2 and Q3 2019, before falling back slightly in Q4.


Roskill’s NEW Tungsten: Outlook to 2028 report was published in March 2019. Visit to download the brochure or sample pages or access further information.