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$480/mtu in 2011 (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$440-450/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. 

It is possible that the market will test the US$500/mtu level at some point in 2012 (Roskill).

Tungsten Market

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 it's tungsten industry through the imposition of production and export quotas, and the removal of export rebates on tungsten products.

Over the 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 prices have risen 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 levels that were last seen in June 2005, when APT peaked at US$300/mtu.

The outlook for the tungsten market is relatively positive as demand is expected to increase at almost 6%py to 2016, driven on by strong growth in China. Supply of tungsten will struggle to match demand growth at least until 2013, when some of the potential tungsten-producing projects are expected to begin production. However, any delays in commissioning of these projects would quickly see a growing deficit in the market with a resultant upward pressure on prices (Roskill).