Demand and Pricing

Tungsten is typically priced according to metric ton units (mtu) of APT, which is equal to 10 kg. tungsten per tonne of material it is contained within and its intermediaries are not sold on any terminal markets.  APT and concentrate prices are mainly based on quotations published twice weekly by London’s metal bulletin and other trade journals (ITIA).  APT prices have fluctuated from a low of US$10/mtu in 1963 to US$300/mtu in 2004 (prices not adjusted for inflation).

Pricing History

Due to China’s dominance of the industry through high volumes of low cost exports and otherwise poor market conditions throughout the 1980’s and 1990’s, most Western producers were driven from the market.   In the early 1990’s tungsten prices fell to a low of US$45/mtu for concentrates.  Many Chinese mines were high graded and APT plants artificially supported by the government in a non-transparent market (Haywoods).  As a result very little exploration and mine development outside of China took place over the period.  Starting in 2004, growth in global demand for tungsten and changes in policy in China led to significant increases in the price of tungsten to a current price of US$220-250/mtu for APT.

 China has since become a net importer of tungsten and has imposed export tariffs of 5% on exports with tungsten being deemed a strategic material with export restrictions in place for tungsten concentrates.  Producers are now struggling to meet demand.  This has led to a significant increase in exploration and development recently outside of China, particularly in Vietnam, Australia and the Americas.  A continuing escalation in the price of concentrates and APT is likely.  Over the next 5 years the global APT price could reach $300/mtu for APT (Haywoods).

 Tungsten Market

Worldwide consumption of tungsten was 88 million mtu in 2008 (HC Starck).  In light of recent events, previously estimated consumption increases will likely be downgraded from 10% p.a. growth (Hayward) and will probably remain neutral or increase marginally until the end of 2010 and then increase by 5% thereafter.  The market is heavily influenced by Chinese production -which is responsible for over 80% of world supply (Haywoods).  Due to the mining of lower grades, increased mining costs and decreased capacity, China’s ability to maintain current production levels is unlikely.  With no new major production expected to come on stream until after 2011, supply shortfalls are expected.

 Western world supply is tightly constrained and future production is limited to a small number of projects.  Many of these including Dragon Capital’s Nui Phao Project, Vital Metals’ Watershed project, and Queensland Ore’s Wolfram Camp project have been delayed or put on hold due to technical or financing issues.

Recent consolidation in the industry has also limited the amount of tungsten concentrate available for sale – with most future production locked into off-take agreements with end users.