Europe faces 'prompt premium' on low APT supply

European tungsten intermediates prices remained stable despite weakening Chinese domestic and export market on low inventory and strong demand, which market sources said has supported a "prompt premium" on the continent.

Prices for ammonium paratungstate (APT) in Europe have remained unchanged for over a week at $347-352/mtu duty unpaid in warehouse Rotterdam despite a $7/mtu decline in Chinese export prices to the lowest since early March of $330-335/mtu fob China yesterday.

Although Chinese export prices fell because of softening domestic demand and yuan depreciation, multiple market participants said there was low inventory in Europe and no unsold shipments heading into the region from China.

"The prompt premium is here to stay for the time being in Europe", one seller said. Prices on the forward market are lower than the spot, market participants noted but lower replacement costs are unlikely to trigger reduced offers in the spot market, the seller added.

Consumers are working with lean inventories during times of logistical constraints and strong demand, which is forcing buyers to pay a premium for prompt material. On the other hand, consumers remain cautious in their buying activity on near-term demand concerns stemming from the Chinese Covid restrictions and geopolitical conflicts.

"We are keeping inventory at low levels," one buyer said, adding that they were hesitant to hold high-priced inventories although they have a bigger buffer stocks this year than in previous years because of the shipping issues.

Tungsten concentrates prices also remained stable after rising this year amid tight supply and steady demand.

The market faced supply pressures as logistical constraints hit Latin American shipments and reduced African supplies, while rising energy costs halted European mining activity.

W Resources has temporarily suspended production at its La Parrilla tin and tungsten mine in Spain partly because of elevating LNG costs, which jumped seven times higher than average monthly charges in 2021. In late April, Tungsten West paused the current development plan for Hemerdon tin and tungsten mine in Devon, England, because of "significant and rapid inflation" for key inputs, like steel, cement, explosives, power and diesel, which was further exacerbated by the Russia-Ukraine war.

This came on the back of continued transport problems and port congestions in Latin America and Africa. As a result, tungsten prices moved higher in the first quarter, market participants said. Prices for 50-70pc tungsten concentrates have risen over 10pc in the year-to-date period, Argus data showed.

By Anuradha Ramanathan