China tungsten at record highs, ore shortage bites
SINGAPORE/HONG KONG: Tungsten prices have hit record highs as top supplier China steps up measures to preserve dwindling ore resources and cut exports of the metal used in machine tools, light bulbs and weapons.
The price of APT, a heavily traded tungsten-based material, has more than tripled this year on reduced supply from China and is up 25 percent since May 1, when Beijing slashed an export tax rebate to retain more metal for its fast-growing economy.
Li Chuncheng, vice director of the China Tungsten Industry Association’s Beijing office, said the government might remove the rebate completely and begin taxing exports should producers fail to rein in output and overseas sales.
“We are asking producers to behave, otherwise the government will strengthen its controls,” Li told Reuters, adding tungsten output had surpassed government targets in the last few years.
China, home to about 30 percent of the world’s proven tungsten reserves, is offering less APT for export as it battles an ore shortage and processes more of the fine, white material to make cemented carbides and tools for its own domestic use.
As China supplies about four-fifths of the world’s APT, global prices have soared in line with domestic prices squeezed by the raw material shortage — attracting sellers back to the export market.
“The change in the market this year is way beyond everyone’s expectations,” a trader in Beijing said, adding the surge in prices had attracted speculators keen to make a quick profit.
Chinese traders and producers said they sold small spot cargoes of APT to Europe last week at $290 per metric tonne unit, a measure equal to a hundredth of a tonne. No spot deals were concluded this week, they said, although offers were pitched at $295 to $300 per metric tonne unit.
China demand: Industry officials said China’s tungsten demand had risen more than 50 percent in the last three years to about 20,000 tonnes a year.
But mine output had lagged this growth as Beijing cracked down on wildcat operators and restructured state-owned mines.
Opinion among traders was divided on how far prices would rise. Some said Chinese mines shut earlier this year due to power shortages were now running near full capacity, and that supply would also be boosted by mines in other countries. reuters